Finance Act 2000

63 (1) For the purposes of paragraphs 61 and 62 “finance costs” means the costs of debt finance.

(2) In calculating the costs of debt finance, the matters to be taken into account include—

(a) any costs giving rise to a trading or non-trading debit under Chapter II of Part IV of the [1996 c. 8.] Finance Act 1996 (loan relationships);

(b) any trading profit or loss, under Chapter II of Part IV of the [1994 c. 9.] Finance Act 1994 (interest rate and currency contracts), in relation to debt finance;

(c) any exchange gain or loss within the meaning of Chapter II of Part II of the [1993 c. 34.] Finance Act 1993 in relation to debt finance;

(d) the finance cost—

(i) implicit in a payment under a finance lease, or

(ii) payable on debt factoring or any similar transaction; and

(e) any other costs arising from what would be considered on normal accounting principles to be a financing transaction.

(3) No adjustment shall be made under paragraph 61 or 62 if, in calculating for a period the company's, or as the case may be, the group’s deductible finance costs outside the ring fence, the amount taken into account in respect of costs and losses is exceeded by the amount taken into account in respect of profits and gains.