Income Tax (Trading and Other Income) Act 2005 section 29

Interest

Section 29 establishes that interest paid on any loan is treated as a revenue (day-to-day business) expense rather than a capital expense when calculating trading profits.

• Interest is always classified as revenue in nature for the purpose of calculating trading profits
• This classification applies regardless of the nature of the underlying loan, including loans of a capital nature
• The general rule prohibiting deductions for capital employed in a trade does not prevent the deduction of interest
• Whether interest is actually deductible depends on whether it meets the normal criteria for deducting a revenue expense in calculating trading profits