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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
, see all updates

Example: non-payment of interest

Amount of loan £1,000,000

Interest payable 5%

No interest paid for 3 years when half total interest deferred is waived by the trustees.

Year 1

Interest unpaid for year £1,000,000 @ 5% = £50,000

Benefit £50,000 @ 5% = £2,500

Year 2

Interest unpaid for year £1,000,000 @ 5% = £50,000
     
Plus interest deferred Year 1   £50,000
Total interest deferred   £100,000

Benefit £100,000 @ 5% = £5,000

Year 3

Interest unpaid for year £1,000,000 @ 5% = £50,000
     
Plus interest deferred Year 2   £100,000
Total interest deferred   £150,000

Benefit £150,000 @ 5% = £7,500

There is also a benefit of £75,000 when half total interest deferred is written off.