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I’m a bit confused, when adjusting trading income what is the definition of “individuals”, I don’t know if this is just Sole trader or could include a Ltd Company.
Typical expenditure by a business
(H) Interest payable & (b) qualifying interest payable, I don’t know the distinction between them.Interest paid for borrowing for trading purposes is allowable for individuals, but I need to understand the above to classify.
Please can you help
An individual is an unincorporated trader such as a sole trader or partner as distinct from an incorporated trader, a company.Interest payable on trading loans is an allowable deduction for both individuals and companies against the trading profits of the business.
For an individual you will also see in chapter 2 that there are a limited number of other loans taken out by individuals that attract tax relief as “qualifying loan interest” where a deduction from the taxpayer’s total income on their income tax computation is available.The other instances where it can be classified as a qualifying loan interest:
Interest paid gross on any of the following types of loans qualify and thereby can be deducted from Total Income
1. Loan to buy plan and machinery for use in partnership
2. Loan to invest in a partnership
3. Loan to buy interest in an employee controlled company
4. Loan to invest in a co-operative
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