Valid from 06/04/2005

Part 2 U.K.Trading income

Chapter 5U.K.Trade profits: rules allowing deductions

Incidental costs of obtaining financeU.K.

58Incidental costs of obtaining financeU.K.

(1)In calculating the profits of a trade, a deduction is allowed for incidental costs of obtaining finance by means of—

(a)a loan, or

(b)the issue of loan stock,

if the interest on the loan or stock is deductible in calculating the profits of the trade.

(2)“Incidental costs of obtaining finance” means expenses—

(a)which are incurred on fees, commissions, advertising, printing and other incidental matters, and

(b)which are incurred wholly and exclusively for the purpose of obtaining the finance, providing security for it or repaying it.

(3)Expenses incurred wholly and exclusively for the purpose of—

(a)obtaining finance, or

(b)providing security for it,

are incidental costs of obtaining the finance even if it is not in fact obtained.

(4)But the following are not incidental costs of obtaining finance—

(a)sums paid because of losses resulting from movements in the rate of exchange between different currencies,

(b)sums paid for the purpose of protecting against such losses,

(c)the cost of repaying a loan or loan stock so far as attributable to its being repayable at a premium or having been obtained or issued at a discount, and

(d)stamp duty.

(5)This section needs to be read with section 59 (which provides for restrictions in relation to convertible loans and loan stock etc.).

Modifications etc. (not altering text)