(1)M1Subject to this section and sections [F1372] 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) [F2and 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 [F4356A,] 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 M2Housing 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 M3Housing (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)M4Subsection (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)M5In 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)in paragraph (a) after the word “used”, where it first occurs, there were inserted the words “ wholly or to a substantial extent ”; and
(b)paragraph (b) and the word “or” immediately preceding it were omitted.
[F5and 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”.]
[F6(6A)In disregarding section 353(2) for the purposes of subsection (2)(c) above, section 353(1C) and (1D) shall apply for determining whether or not the condition in section 355(1) or 356(1) is fulfilled as (but for section 353(2)) they would apply for the purpose of determining whether or not the case falls, or is treated as falling, within section 355(1)(a) or 356.]
(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 ” and paragraph (b) and the word “or” immediately preceding it were omitted; and
[F7(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)for the words “subsection (1)(a)”, wherever they occur, there were substituted the words “subsection (1)”;
(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
F1Words 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)
F2Words 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)
F3Words 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)
F41988(F) s.42(3)(c).
F5Words 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)
F6S. 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)
F7S. 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)
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
M1Source-1982 Sch.7 2(1)-(3)
M4Source-1982 Sch.7 2(7)
M5Source-1982 Sch.7 3(1)-(3)