Taxation (International and Other Provisions) Act 2010 Schedule 7 Part 6

Relocation of restriction on interest deductions

Schedule 7 Part 6 moves an existing rule about restricting deductions for interest from the Income and Corporation Taxes Act 1988 into a more appropriate location within the Corporation Tax Act 2009.

• Companies cannot claim a deduction for interest payments except under the loan relationships rules in Part 5 of CTA 2009
• The original rule in section 337A(2) of ICTA is repealed and rewritten as new section 1301A of CTA 2009
• The rule was retained as a safeguard for any cases where interest might not automatically fall within the loan relationships provisions
• The new location in Chapter 1 of Part 20 of CTA 2009 (restriction of deductions) is considered more appropriate for this type of provision