Income Tax (Trading and Other Income) Act 2005 section 274A

Reduction for individuals: entitlement

Section 274A sets out when an individual is entitled to a basic rate tax reduction in respect of finance costs that can no longer be deducted from property business profits because of the restriction under section 272A.

• An individual qualifies for the basic rate tax reduction if they have one or more "relievable amounts" for a tax year, with a separate relievable amount for each property business they carry on
• The relievable amount for each property business is the total of three possible components: a current-year amount (the individual's share of disallowed finance costs for the year), a current-year estate amount (where the individual receives estate income linked to a property business with disallowed costs), and any brought-forward amount from earlier years
• Where the property business is carried on in partnership, the individual's share of the disallowed finance costs is proportionate to their share of the profits — so if they are taxed on, say, 50% of the profits, their current-year amount is 50% of the total disallowed costs
• For estate beneficiaries, the current-year estate amount is calculated by reference to the proportion of the estate income that relates to the property business profits and the personal representatives' share of those profits