Taxation (International and Other Provisions) Act 2010 section 396

The interest allowance of a worldwide group for a period of account

Section 396 defines how a worldwide group's interest allowance is calculated for a period of account, combining a basic interest allowance with any aggregate net tax-interest income.

• The interest allowance for a period of account equals the basic interest allowance plus any aggregate net tax-interest income of the group for that period.
• By default, the basic interest allowance is calculated using the fixed ratio method.
• If the group has made a group ratio election for the period, the basic interest allowance is instead calculated using the group ratio method.
• Where a group has aggregate net tax-interest income for a period, this amount is added to the basic interest allowance to give the total interest allowance.