Tax Relief on Interest – is it still available?

The word “interest” has attracted a lot of attention in the media recently mainly due to:

  • The Bank of England base rate dropping to 0.25%
  • Articles about Brexit
  • Discussions on the housing market
  • The Basic Rate restriction on tax relief available to landlords

There are still plenty of ways that you can get tax relief for the interest you pay.

Tax relief is available if you use the money you borrow to:

  • Buy or improve commercial property; the new 20% restriction only applies to residential property; residential landlords will still be able to reduce their tax by up to 20% of the interest paid.
  • Buy ordinary shares in or lend money to a limited company where you own more than 5% of the ordinary shares or most of your work time is spent in the management and conduct of its business.
  • Acquire an interest in a trading or professional partnership, including an LLP.
  • Provide funds to your partnership, including an LLP, or sole-trader business where the funds are used wholly for the business.
  • Buy equipment for use in your partnership, LLP, sole-trader business or employment where capital allowances are available on the equipment.
  • Buy ordinary share capital in an employee controlled company where you are a full time employee.
  • Acquire a share or lend money to a co-operative where the money is used wholly and exclusively for its business.

Note: this does not apply to credit card or overdraft interest.

If you would like to discuss your Tax Relief, please contact us on: 01293 521191 or info@placedobson.co.uk

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