Taxation (International and Other Provisions) Act 2010 Schedule 2 Part 3

Other amendments relating to alternative finance arrangements

Schedule 2 Part 3 (paragraphs 46–55) makes amendments across several tax Acts to ensure that alternative finance arrangements — such as Sharia-compliant financial products — are treated in the same way as conventional interest-bearing loans for the purposes of interest relief, employee benefit-in-kind rules, Community Investment Tax Relief, and recognised stock exchange designations.

• Purchase and resale arrangements are treated as loans and alternative finance return is treated as interest for the purposes of income tax relief on interest payments, ensuring parity with conventional lending.
• For employment income purposes, alternative finance arrangements (including purchase and resale, and diminishing shared ownership) are treated as loans, with alternative finance return treated as interest, when calculating taxable benefits — applying to arrangements entered into on or after 22 March 2006.
• Community Investment Tax Relief is extended so that purchase and resale arrangements, deposit arrangements, and profit share agency arrangements all qualify as loans, and alternative finance return qualifies as interest, enabling Sharia-compliant products to be used as qualifying investments by community development finance institutions.
• The Treasury's power to designate recognised stock exchanges can be exercised specifically for the purposes of investment bond arrangements under the alternative finance rules.