Income Tax (Trading and Other Income) Act 2005 section 370A

Valuation of interest not paid in cash

Section 370A provides rules for determining the taxable value of interest payments that are made in a form other than cash, such as goods, services or vouchers.

• Where interest is paid in the form of goods or services, the taxable amount is the market value of those goods or services at the time of payment.
• Where interest is paid by way of a voucher, the taxable amount is the highest of the voucher's face value, its cash exchange value, or the market value of any goods or services it can be exchanged for.
• A voucher for these purposes includes any voucher, stamp, token or similar document capable of being exchanged for money, goods or services.
• These rules ensure that interest paid in kind is brought into charge to income tax at a fair and consistent value, preventing undervaluation through non-cash payment methods.