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HMRC internal manual

Business Income Manual

Specific deductions: professional fees: other loans

Fees connected with raising, repaying or replacing long-term finance - capital

Outside certain trades in the financial sector, fees incurred in connection with raising, repaying or replacing long-term finance, or rearranging the terms on which such finance is borrowed are capital on general principles, see:

  • Texas Land and Mortgage Co v Holtham [1894] 3 TC 255 (see BIM35580)
  • Montreal Coke & Manufacturing Co Ltd v Minister of National Revenue (Canada) [1944] 1 All ER 743
  • Whitehead v Tubbs (Elastics) Ltd [1983] 57 TC 472 (see BIM35575)

For the borderline between finance that is an ordinary day-to-day incidence of carrying on the business and long-term finance, see Beauchamp v Woolworths PLC [1989] 61 TC 542.

The cost of transferring a mortgage on business premises is capital, see Small v Easson [1920] 12 TC 351.

However, there is a statutory relief for many of the incidental costs incurred in relation to loan finance, see BIM45800 onwards.