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Loan relationship rules

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Loan relationship rules

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Tax Tutor.
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  • May 6, 2021 at 10:12 am #619848
    Yovin
    Member
    • 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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