Finance Act, 1974

Relief to individuals on loans applied in acquiring interest in companies.

34.—(1) This section applies to a loan to an individual to defray money applied—

(a) in acquiring any part of the ordinary share capital of—

(i) a company which exists wholly or mainly for the purpose of carrying on a trade or trades or a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, or

(ii) a company whose business consists wholly or mainly of the holding of stocks, shares or securities of such a company as is referred to in subparagraph (i), or

(b) in lending to such a company as is referred to in paragraph (a) money which is used wholly and exclusively for the purpose of the trade or business of the company or of a connected company, or

(c) in paying off another loan where relief could have been obtained under this section for interest on that other loan if it had not been paid off (on the assumption, if the loan was free of interest, that it carried interest).

(2) Relief shall be given in respect of any payment of the interest by the individual on the loan—

(a) if when the interest is paid he has a material interest in the company or in a connected company,

(b) if, during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, he has worked for the greater part of his time in the actual management or conduct of the business of the company or of a connected company, and

(c) if he shows that in the period aforesaid he has not recovered any capital from the company or from a connected company, apart from any amount taken into account under section 35.