Income and Corporation Taxes Act 1988

354 Loans to buy land etc. U.K.

(1) M1 Subject to sections 355 to 358 and subsections (2) [F1 to (4)] below, interest is eligible for relief under section 353 if it is paid by a person for the time being owning an estate or interest in land, or the property in a caravan or house-boat, in the United Kingdom or the Republic of Ireland on a loan to defray money applied—

(a) in purchasing that estate, interest or property, or another estate, interest or property absorbed into, or given up to obtain, that estate, interest or property; or

(b) in improving or developing the land, or buildings on the land; or

(c) in paying off another loan, if interest on that other loan would have been eligible for relief under section 353 had the loan not been paid off (on the assumption, if the loan was free of interest, that it carried interest) or would have been so eligible apart from section 353(2).

(2) In this section and section 355—

(a) M2 references to money applied in improving or developing land or buildings include references to payments in respect of maintenance or repairs incurred by reason of dilapidation attributable to a period before the estate or interest was acquired, but otherwise do not include references to payments in respect of maintenance or repairs, or any of the other payments mentioned in section 25(1); and

(b) M3 references to money applied in improving or developing land include references to expenditure incurred or defrayed directly or indirectly in respect of street works, other than works of maintenance or repair, for any highway or road, or in Scotland any right of way, adjoining or serving the land.

F2 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) M4 References in this section and in section 355 to an estate or interest do not include references—

(a) to a rentcharge or, in Scotland, a superiority or the interest of a creditor in a contract of ground annual; or

(b) to the interest of a chargee or mortgagee or, in Scotland, the interest of a creditor in a charge or security of any kind over land.

F3 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) M5 Where interest is payable by the tenant occupier of any property to the landlord in pursuance of arrangements whereby money advanced at interest by the landlord is applied by the tenant in purchasing the landlord’s estate or interest, or in the case of a caravan or house-boat the property in the caravan or house-boat, but that estate or interest or property is not to pass to the tenant until some time after the interest begins to be payable, this section and section 355(5) shall have effect in relation to the tenant as if he were the owner of the landlord’s estate, interest or property.

Textual Amendments

F1 Words in s. 354(1) substituted (27.7.1993 with effect in relation to payments of interest made on or after 16 March 1993(whenever falling due)) by 1993 c. 34, s. 57(4)(a)(5)

F2 S. 354(3) repealed (1991-92 and subsequent years) by Finance Act 1991 (c. 31, SIF 63:1), ss. 28, 123, Sch. 19 Pt. V, Note 6

F3 S. 354(5)(6) repealed (27.7.1993 with effect in relation to payments of interest made on or after 16 March 1993(whenever falling due)) by 1993 c. 34, ss. 57(5), 213, Sch. 23 Pt. III

Marginal Citations

M1 Source-1972 Sch.9 1, 5, 5A; 1974 Sch.1 1-3; 1983 s.17(5)

M2 Source-1972 Sch.9 3

M3 Source-1972 Sch.9 4

M4 Source-1972 Sch.9 6

M5 Source-1972 Sch.9 7