Income and Corporation Taxes Act 1988

370 Relevant loan interest. U.K.

(1) M1 Subject to this section and sections [F1 372] to 376, in this Part “relevant loan interest” means interest which is paid and payable in the United Kingdom to a qualifying lender and to which subsection (2) or (3) below applies.

(2) Subject to subsection (4) below, this subsection applies to interest if, disregarding section 353(2) [F2 and any other provision applying to interest falling to be treated as relevant loan interest]—

(a) it is interest falling within section 354(1) or 365; and

(b) apart [F3 (where applicable) from] section [F4 356A,] 357 or 365(3), the whole of the interest either would be eligible for relief under section 353 or would be taken into account in a computation of profits or gains or losses for the purposes of Case I, II or VI of Schedule D for any year of assessment; and

(c) except in the case of interest falling within section 365, at the time the interest is paid, the condition in either section 355(1) or 356(1) is fulfilled with respect to the land, caravan or house-boat to which the loan concerned relates.

(3) This subsection applies to interest which is payable on a loan—

(a) in respect of which there was in force on 31st March 1983—

(i) an option notice given under section 24(2) of the M2 Housing Subsidies Act 1967 (option mortgages) other than one falling within section 27(3)(b) of the Finance Act 1982; or

(ii) an option notice given under Article 142(2) of the M3 Housing (Northern Ireland) Order 1981 (option mortgages in Northern Ireland) other than one falling within section 27(4)(b) of the Finance Act 1982; and

(b) which relates to a dwelling in respect of which, at the time the interest is paid, the condition in section 355(1) is fulfilled.

(4) M4 Subsection (2) above does not apply to interest payable on a loan the only security for which is a contract of insurance on human life or a contract to pay an annuity on human life.

(5) M5 In determining whether subsection (2) above applies to any interest, sections 354(1) and 365 shall each have effect as if the words “or the Republic of Ireland” were omitted.

(6) In determining whether subsection (2)(c) above applies to any interest, section 355(1) shall have effect as if—

(a) F5 . . . after the word “used”, where it first occurs, there were inserted the words “ wholly or to a substantial extent ”; F6 . . .

(b) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F7 and section 355(1A) shall have effect as if after the word “used” in paragraph (a) there were inserted the words “wholly or to a substantial extent”.]

[F8 (6A) F9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(7) In determining for the purposes of subsection (3)(b) above whether the condition in section 355(1) is for the time being fulfilled with respect to any dwelling—

(a) subsection (1) of that section shall have effect as if for the words from “section 354” to “used” (where it first occurs) there were substituted the words “ interest shall not be relevant loan interest for the purposes of section 369 unless the dwelling to which the loan relates is at the time the interest is paid used wholly or partly ”F10 . . . ; and

[F11 (aa) subsections (1A) and (1B) of that section shall have effect as if—

(i) after the word “used” in paragraph (a) of subsection (1A) there were inserted the words “wholly or partly”;

(ii) F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) for the words “land, caravan or house-boat”, wherever they occur without being immediately preceded by the word “other”, there were substituted the word “dwelling”; and

(iv) for the words “other land, caravan or house-boat”, wherever they occur, there were substituted the words “land, caravan or house-boat”; and]

(b) subsection (3) of that section shall have effect as if for “land, caravan or house-boat” there were substituted “ dwelling ”.

Textual Amendments

F1 Words in s. 370(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)(c)(5)

F2 Words in s. 370(2) inserted (with effect in accordance with s. 81(6) of the amending Act) by Finance Act 1994 (c. 9), Sch. 9 para. 10(1)(a)

F3 Words in s. 370(2)(b) substituted (with effect in accordance with s. 81(6) of the amending Act) by Finance Act 1994 (c. 9), Sch. 9 para. 10(1)(b)

F4 1988(F) s.42(3)(c).

F5 Words in s. 370(6)(a) repealed (with effect in accordance with s. 42(3)-(5) of the repealing Act) by Finance Act 1995 (c. 4), Sch. 29 Pt. 8(2), Note

F6 S. 370(6)(b) and preceding word repealed (with effect in accordance with s. 42(3)-(5) of the repealing Act) by Finance Act 1995 (c. 4), Sch. 29 Pt. 8(2), Note

F7 Words in s. 370(6) inserted (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)(d)(5)

F8 S. 370(6A) inserted (with effect in accordance with s. 81(6) of the amending Act) by Finance Act 1994 (c. 9), Sch. 9 para. 10(2)

F9 S. 370(6A) repealed (with effect in accordance with s. 42(3)-(5) of the repealing Act) by Finance Act 1995 (c. 4), Sch. 29 Pt. 8(2), Note

F10 Words in s. 370(7)(a) repealed (with effect in accordance with s. 42(3)-(5) of the repealing Act) by Finance Act 1995 Sch. 29 Pt. 8(2), Note

F11 S. 370(7)(aa) inserted (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)(e)(5)

F12 S. 370(7)(aa)(ii) repealed (with effect in accordance with s. 42(3)-(5) of the repealing Act) by Finance Act 1995 (c. 4), Sch. 29 Pt. 8(2), Note

Modifications etc. (not altering text)

C1 See S.I. 1988 No.1347 (in Part III Vol.5)in respect of housing associations.

C2 See Part II Vol.5 (1989edition).

Marginal Citations

M1 Source-1982 Sch.7 2(1)-(3)

M2 1967 c. 29.

M3 S.I. 1981/156 (N.I.3).

M4 Source-1982 Sch.7 2(7)

M5 Source-1982 Sch.7 3(1)-(3)