Section 383 — Income Tax Act 2007: Relief for interest payments

Relief for interest payments 383 1 A person who pays interest in a tax year is entitled to relief for the tax year for the interest if—

a the loan on which the interest is payable is a loan to which a provision specified in subsection (2) applies, b the interest is eligible for relief in accordance with this Chapter, and c the person makes a claim.

2 The provisions are—

a section 388 (loan to buy plant or machinery for partnership use),

b section 390 (loan to buy plant or machinery for employment use),

c section 392 (loan to buy interest in close company etc ),

d section 396 (loan to buy interest in employee-controlled company),

e section 398 (loan to invest in partnership),

f section 401 (loan to invest in co-operative),

and g section 403 (loan to pay inheritance tax).

3 The amount of the relief given under subsection (1) is equal to the amount of the interest eligible for relief.

4 The relief is given by deducting that amount in calculating the person's net income for the tax year in which the interest is paid (see Step 2 of the calculation in section 23).

5 This section is subject to—

a section 384 (general restrictions on relief under this Chapter), aa section 384B (restriction on relief where cash basis applies),

b section 385 (general provisions about loans),

c section 386 (loans partly meeting requirements),

d section 387 (exclusion of double relief etc),

and e section 405 (carry back and forward of relief for interest on loans within section 403).

6 See also section 564O (under which this Chapter applies as if arrangements to which section 564C applies were loans and alternative finance return were interest).