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Hi Sir ,
Can you please confirm if my calculation is correct.
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.
Allowable deduction from trading profit is:
Loan interest = 75%×1200000=£900000
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