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Loan relationship rules

This topic has 1 reply, 2 voices, and was last updated 4 years ago by Tax Tutor.

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May 6, 2021 at 10:12 am #619848
Yovin
Participant
- Topics: 25
- Replies: 1
Hi Sir ,
Can you please confirm if my calculation is correct.
QUESTION
Company borrow £1350000 of which £1200000 was for purchasing a building used in trade and the balance is for working capital. 25% of the building was rented out. The loan arrangement fee is £2000.
ANSWER
Allowable deduction from trading profit is:
Working capital=£150000
Loan interest = 75%×1200000=£900000
Loan fee=75%×2000=£1500
May 9, 2021 at 9:47 am #620131
Tax Tutor
Member
- Topics: 2
- Replies: 3965
What answer is given in your book for this question? Remember of course that the loan interest and fees applicable to the non trading loan is an allowable deduction from interest income under the non trading loan relationship rules
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