Point in time view as at 13/06/2003.
Income Tax (Earnings and Pensions) Act 2003, Section 182 is up to date with all changes known to be in force on or before 09 March 2025. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
The normal method of calculating for the purposes of this Chapter the amount of interest that would be payable on a loan for a tax year at the official rate is as follows. Step 1
Calculate the average amount of the loan outstanding during the tax year—
1. Find the maximum amount of the loan outstanding on 5th April preceding the tax year or, if the loan was made in the tax year, on the date it was made.
2. Find the maximum amount outstanding on 5th April of the tax year or, if the loan was discharged in the tax year, on the date of discharge.
3. Add these amounts together and divide the result by 2.
Step 2
If the official rate of interest changed during the period in the tax year when the loan was outstanding, calculate the average official rate of interest for that period as follows—
1. Multiply each official rate of interest in force during the period by the number of days when it is in force.
2. Add these products together.
3. Divide the result by the number of days in the period.
Step 3
Calculate the amount of interest that would be payable on the loan for the tax year at the official rate as follows—
where—
A is the average amount of the loan outstanding during the tax year obtained from step 1,
I is the official rate of interest in force during the period in the tax year when the loan was outstanding or, if the official rate changed, the average official rate of interest obtained from step 2, and
M is the number of whole months during which the loan was outstanding in the year.
For this purpose a month begins on the sixth day of the calendar month.
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