CH 6 - Deductible Payments

Question 1

What is cap on the total amount of certain reliefs including qualifying loan interest which can be deducted to arrive at taxable income ?

Answer 1

is the greater of :
* £50,000 or
* 25% of adjusted total income

Question 2

PT

What type of loans includes qualifying interest for deductible payments?

4 points

Answer 2

• Loan taken out by an employee to buy plant and machinery in the next 3 years (this does not include a loan to buy a car).
• Loan to buy shares in a close company/provide funds to a close company.
• Loan to buy shares in an employee-owned company.
• Loan to buy into a partnership.

Question 3

When qualifying interest on loan gets restricted?

4 points

Answer 3

On recovery of capital in respect of the asset for which the loan was taken out (e.g. selling the shares)

They are deemed to have used the capital recovered to repay the loan, thereby restricting the interest relief from that point onwards.

ITA 2007, s.406