Question:
Is tax relief limited only to the interest incurred on a qualifying loan or also on the arrangement fee?
Arthur Weller replies:
In HMRC’s Business Income manual at www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45800 it states: ‘A statutory deduction in computing the profits of a trade applies to the incidental costs of raising loan finance which would otherwise not be an allowable deduction. The rules apply only to income tax. There are special rules regarding the incidental costs of raising loan finance for businesses using the cash basis - see BIM70040’.
