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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Specific deductions - incidental costs of loan finance: commitment fees

S58 Income Tax (Trading and Other Income) Act 2005

Commitment or ‘procuration’ fees (money paid to an agent for negotiating a loan) may be incurred as part of the cost of raising finance. On general principles, such fees would not be allowable if the finance is a permanent addition to capital, but are deductible where the borrowings are temporary and can be regarded as an ordinary incident of carrying on the business (Ascot Gas Water Heaters Ltd v Duff 24TC171 on page 176).

Where such fees are not allowable on general principles, you should allow any such fees incurred in connection with loans or loan stock as incidental costs of obtaining finance - BIM45815 bullet point (d).