Finance Act, 1982

Restriction of relief for interest paid by companies.

23.—(1) In this section “relevant interest” means the excess of the amount of interest paid by a company on a loan over so much of that interest as bears to the full amount thereof the same proportion as £2,500 (or, if it is smaller, the amount of the loan) bears to the amount of the loan:

Provided that in the case of a company that has one or more associated companies within the meaning of section 102 of the Corporation Tax Act, 1976 , the reference to £2,500 shall be deemed to be a reference to £2,500 divided by one plus the number of those associated companies.

(2) References in subsection (1) to the amount of a loan, shall, if there are more loans than one, be deemed to be references to the aggregate amount of the loans.

(3) In relation to—

(a) relevant interest paid on all loans made after the operative date,

(b) all relevant interest paid on or after the 6th day of April, 1985,

(c) interest—

(i) paid after the operative date on an overdraft which was not in existence on that date,

(ii) paid on or after the 6th day of April, 1983, on an overdraft which was in existence on the operative date, and

(d) interest on an overdraft referred to in paragraph (c) (ii) where that interest is paid in the year ending on the 5th day of April, 1983, in so far as the amount of the interest exceeds the amount of the interest which would have been payable for that year on the amount of the overdraft on the operative date at the rate at which interest on that amount was chargeable on the operative date,

section 10 of the Corporation Tax Act, 1976 , shall have effect as if the following subsection were substituted for subsection (6)—

“(6) Subject to subsection (7), interest shall not be treated as a charge on income.”.