Finance Act 2018

Amendment of section 97 of Principal Act (computational rules and allowable deductions)

23. (1) Section 97 of the Principal Act is amended by substituting the following for subsection (2J):

“(2J) (a) Notwithstanding subsection (2), but subject to the other provisions of this section (including paragraphs (b) and (c) of this subsection), the deduction authorised by subsection (2)(e) shall not exceed—

(i) 75 per cent of the deduction that would, but for this subsection, be authorised by subsection (2)(e) in respect of interest accrued on or after 7 April 2009 up to and including 31 December 2016,

(ii) 80 per cent of the deduction that would, but for this subsection, be authorised by subsection (2)(e) in respect of interest accrued on or after 1 January 2017 up to and including 31 December 2017, and

(iii) 85 per cent of the deduction that would, but for this subsection, be authorised by subsection (2)(e) in respect of interest accrued on or after 1 January 2018 up to and including 31 December 2018,

on borrowed money employed in the purchase, improvement or repair of a premises which, at the time the interest accrues, is a residential premises.

(b) For the purposes of paragraph (a)—

(i) borrowed money employed on the construction of a residential premises on land in which the person chargeable has an estate or interest shall, together with any borrowed money which that person employed in the acquisition of such land, be deemed to be borrowed money employed in the purchase of a residential premises,

(ii) where a premises consists in part of residential premises and in part of premises which are not residential premises, paragraph (a) shall apply to the interest accrued on the part of the borrowed money employed in the purchase, improvement or repair of the premises that is attributable, on a just and reasonable basis, to residential premises, and

(iii) the interest on borrowed money referred to in paragraph (a) shall be treated as accruing from day to day.

(c) This subsection shall not apply in respect of interest accrued on or after 1 January 2019.”.

(2) Subsection (1) shall come into operation on 1 January 2019.