Taxation (International and Other Provisions) Act 2010 section 414

Qualifying net group-interest expense

Section 414 defines "qualifying net group-interest expense", which is used to calculate the group ratio percentage and the group ratio debt cap, and which excludes certain categories of interest expense that are considered non-qualifying.

• Qualifying net group-interest expense equals the adjusted net group-interest expense minus any downward adjustments, with a floor of nil (it cannot be negative)
• Downward adjustments remove interest expense relating to transactions with or financial liabilities owed to related parties of group members
• Downward adjustments also remove interest expense on results-dependent securities and relevant equity notes (perpetual or very long-dated instruments)
• Where a counterparty is only a related party for part of the period, the downward adjustment is reduced on a just and reasonable basis for the part when they were not a related party