357BF1Treatment of loans following security substitution.U.K.
(1)This section applies where—
(a)by virtue of section 357A a loan is treated to any extent as having been used at a particular time to defray money applied in purchasing the new estate, interest or property,
(b)after that time a loan (a new loan) is actually used to any extent to defray money applied in purchasing the new estate, interest or property, and
(c)interest on the new loan is (or would be apart from this section) eligible for relief under section 353 [F2by virtue of section 354].
(2)Subject to subsection (4) below, as regards interest paid on the new loan after the time it is used as mentioned in subsection (1)(b) above (the material time), such part of the loan as was actually used to defray money applied in purchasing the new estate, interest or property shall be treated for the purposes of sections 353 to 379 as having been so used only to the extent that the amount of that part does not exceed the applicable amount.
(3)Subsection (4) below applies in a case where—
(a)two or more new loans are simultaneously used to any extent as mentioned in subsection (1)(b) above, and
(b)interest on each of them is or would be eligible for relief as mentioned in subsection (1)(c) above.
(4)As regards interest paid on the new loans after the material time, such parts of the loans as were actually used to defray money applied in purchasing the new estate, interest or property shall be treated for the purposes of sections 353 to 379 as having been so used only to the extent that the aggregate of the amounts of those parts does not exceed the applicable amount.
(5)For the purposes of this section the applicable amount is the difference between—
(a)the purchase price of the new estate, interest or property, and
(b)the amount of any relevant loan or, if there is more than one, the total amounts of the relevant loans.
(6)For the purposes of subsection (5) above a relevant loan is a loan which—
(a)before the material time was actually used to any extent to defray money applied in purchasing the new estate, interest or property, or
(b)by virtue of section 357A, is treated to any extent as if before the material time it had been used to defray money so applied;
but a loan is not a relevant loan unless interest on it is eligible for relief under section 353 [F2by virtue of section 354].
(7)For the purposes of subsection (5) above the amount of a relevant loan is its amount when made, except that where—
(a)a loan is a relevant loan by virtue of the fact that it was partly used to defray money applied in purchasing the new estate, interest or property, or
(b)a loan is a relevant loan by virtue of the fact that it is treated as if it had been partly so used,
the amount of the loan shall be taken for the purposes of that subsection to be the amount of the part so used or (as the case may be) treated as so used.
Textual Amendments
F1SS. 357A-357C inserted (27.7.1993) by 1993 c. 34, s. 56
F2Words in s. 357B(1)(c)(6) substituted (with effect in accordance with s. 42(3)-(5) of the amending Act) by Finance Act 1995 (c. 4), s. 42(2)(d)