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HMRC internal manual

Business Income Manual

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Specific deductions - interest: Interest always a revenue item

This chapter applies for Income Tax purposes to the computation of trade profits and property income. References in the text to a ‘business’ should therefore be taken to include both trades and property businesses. The chapter does not apply for Corporation Tax purposes, where there are separate rules in the loan relationships legislation (see CFM11000).

S29 Income Tax (Trading and Other Income) Act 2005

For the purpose of calculating the profits of a business, interest is always to be regarded as an item of revenue rather than capital, whatever the source of the loan.