Income and Corporation Taxes Act 1988

353 General provision. U.K.

(1) M1 Where a person pays in any year of assessment—

(a) annual interest chargeable to tax under Case III of Schedule D; or

(b) interest payable in the United Kingdom or the Republic of Ireland on an advance from a bank carrying on a bona fide banking business in the United Kingdom or the Republic of Ireland or from a person bona fide carrying on a business as a member of the Stock Exchange or bona fide carrying on the business of a discount house in the United Kingdom or the Republic of Ireland;

and the interest is stated in sections 354 to 365 to be eligible for relief under this section, then, if he makes a claim to the relief and subject to the following provisions of this section, sections 354 to 368 and section 237(5)(b), the amount of the interest shall be deducted from or set off against his income for that year of assessment, and income tax shall be discharged or repaid accordingly.

(2) M2 This section does not apply to a payment of relevant loan interest to which section 369 applies.

(3) M3 Relief under this section shall not be given in respect of—

(a) interest on a debt incurred by overdrawing an account or by debiting the account of any person as the holder of a credit card or under similar arrangements; or

(b) where interest is paid at a rate in excess of a reasonable commercial rate, so much of the interest as represents the excess.

[F1 (4) In computing for the purposes of excess liability the total income of a person for any year of assessment, no deduction shall be allowed in respect of any amount of interest which falls to be deducted or set off under subsection (1) above by virtue of section 355(1)(a), 356(1) or 365.

(5) In subsection (4) above, “excess liability” means the excess of liability to income tax over what it would be if all income tax [F2 not chargeable at the lower rate]] were charged at the basic rate, to the exclusion of any higher rate.

Textual Amendments

F1 S. 353(4)(5) added by Finance Act 1991 (c. 31, SIF 63:1), s. 27(1)(3)(5)(7)

F2 Words in s. 353(5) inserted (16.7.1992 with application for the year 1992-93 and subsequent years of assessment) by Finance (No. 2) Act 1992 (c. 48), s. 19(3)(7).

Modifications etc. (not altering text)

C1 See—1988 s.117—limited partners.1988 s.280—transfer of reliefs between spouses.1988(F) Sch.6 para.3(3)—disallowance of interest relief in respect of occupation of commercial woodlands.

Marginal Citations

M1 Source-1972 s.75(1), (6), (7); 1974 s.19(1)(a), (d); 1973 s.23(6); 1976 s.49(5)

M2 Source-1986 s.26(1)

M3 Source-1972 s.75(1A), (2); 1974 s.19(1)(b)