Income and Corporation Taxes Act 1988

373 Loans in excess of the qualifying maximum, and joint borrowers. U.K.

(1) M1 The provisions of this section have effect in relation to a loan where, by virtue of section [F1 356A, section] 357(1) or section 365(3), only part of the interest on the loan would (apart from section 353(2)) be eligible for relief under section 353; and in this section any such loan is referred to as a “limited loan”.

(2) None of the interest on a limited loan is relevant loan interest unless—

(a) the loan is made on or after 6th April 1987; or

(b) the qualifying lender to whom the interest is payable has given notice to the Board in accordance with regulations that he is prepared to have limited loans of a description which includes that limited loan brought within the tax deduction scheme.

(3) If in a case where subsection (2) above applies [F1 section 356D(6) or] section 357(1) requires an earlier loan to be taken into account for the purpose of determining that part of the limited loan interest on which would (apart from section 353(2)) be eligible for relief under section 353, none of the interest on the limited loan is relevant loan interest unless that earlier loan was made by the same qualifying lender as the limited loan.

(4) M2 The reference in subsection (1) above to a loan only part of the interest on which would (apart from section 353(2)) be eligible for relief under section 353 includes a reference to each of two or more loans if, by virtue of [F1 section 356D(7) or] subsection (3)(b) of section 357, the interest on the loans falls to be treated for the purposes of that section as payable on one loan; but, notwithstanding that each of those loans is accordingly a limited loan for the purposes of this section, none of the interest on any of them is relevant loan interest unless each of the loans was made by the same qualifying lender.

(5) M3 Where the condition in paragraph (a) or (b) of subsection (2) above is fulfilled and, if subsection (3) or (4) above also applies, the condition in that subsection is also fulfilled only so much of the interest as (apart from section 353(2)) would be eligible for relief under section 353 is relevant loan interest.

(6) M4 Where a loan on which interest is payable by the borrower was made jointly to the borrower and another person who is not the borrower’s husband or wife, the interest on the loan is not relevant loan interest unless—

(a) each of the persons to whom the loan was made is a qualifying borrower; and

(b) in relation to each of them considered separately, the whole of that interest is relevant loan interest, in accordance with sections 370 to 372 and this section.

(7) In subsection (6) above references to the borrower’s husband or wife do not include references to a separated husband or wife, and for this purpose “separated” has the meaning given by section 367(1).

Textual Amendments

F1 1988(F) s.42(3)(d).

Modifications etc. (not altering text)

C1 See S.I. 1988 No.1347 (in Part III Vol.5)re housing associations.

Marginal Citations

M1 Source-1982 Sch.7 5(1)-(3); 1985 s.37(2)

M2 Source-1982 Sch.7 5(3A); 1983 s.17(2)

M3 Source-1982 Sch.7 5(4); 1983 s.17(2); 1985 s.37(3)

M4 Source-1982 Sch.7 6(1), (2)