Income and Corporation Taxes Act 1988

362 Loan to buy into partnership. U.K.

(1) M1 Subject to sections 363 to 365, interest is eligible for relief under section 353 if it is interest on a loan to an individual to defray money applied—

(a) in purchasing a share in a partnership; or

(b) in contributing money to a partnership by way of capital or premium, or in advancing money to a partnership, where the money contributed or advanced is used wholly for the purposes of the trade, profession or vocation carried on by the partnership; or

(c) in paying off another loan interest on which would have been eligible for relief under that section had the loan not been paid off (on the assumption, if the loan was free of interest, that it carried interest);

and the conditions stated in subsection (2) below are satisfied.

(2) M2 The conditions referred to in subsection (1) above are—

(a) that, throughout the period from the application of the proceeds of the loan until the interest was paid, the individual has been a member of the partnership [F1 otherwise than—

(i) as a limited partner in a limited partnership registered under the Limited Partnerships Act 1907, or

(ii) as a member of an investment LLP;] and

(b) that he shows that in that period he has not recovered any capital from the partnership, apart from any amount taken into account under section 363(1).

Textual Amendments

F1 Words in s. 362(2)(a) substituted (retrospective to 6.4.2001) by Finance Act 2001 (c. 9), s. 76, Sch. 25 para. 9

Modifications etc. (not altering text)

C1 See 1988(F) Sch.6 para.3(3)—disallowance of interest relief in respect of occupation of commercial woodlands.

Marginal Citations

M1 Source-1974 Sch.1 11(1)

M2 Source-1974 Sch.1 12; 1981 s.25(2)