Guidance

Corporate interest restriction on deductions for groups

Find out if your group will need to send a corporate interest restriction return.

Groups deducting more than £2 million a year

Your interest deductions may be restricted if your worldwide group is:

  • subject to UK Corporation Tax
  • expecting to deduct more than £2 million a year in net tax-interest and other financing costs

Your worldwide group will be able to appoint a reporting company and send a corporate interest restriction return.

A worldwide group consists of the ultimate parent company and any consolidated subsidiaries.

You can find more information about worldwide groups in CFM95310.

Your group’s net tax-interest amount is its tax-interest expense minus tax-interest income.

You can find more information about how to work out your group’s net tax-interest amount in CFM95600.

Groups deducting £2 million or less

You don’t need to take any further action. However, you must keep any documents that show that your group won’t deduct more than £2 million in net tax-interest and other financing costs.

If your group’s interest deductions aren’t restricted in the current year, you can still appoint a reporting company and send an abbreviated return.

Your group can then carry forward unused interest allowance from that year to use in the future. You can only carry forward unused interest allowance from years that your group sent a return.

Appointing a reporting company and sending a return

Your deadlines will depend on your group’s accounting period. If you need to send a return you’ll have until at least 31 March 2018 to appoint a reporting company from your group.

The reporting company will then have until at least 30 June 2018 to send the return.

HM Revenue and Customs (HMRC) will publish guidance to help you send us details about your reporting company and send a return by the deadline.

You can find more information about this in CFM98420.

Further information

Read the draft guidance, or contact your group’s HMRC Customer Compliance Manager.

Published 21 December 2017