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HMRC internal manual

Company Taxation Manual

Authorised investment funds (AIFs): taxation of funds: relief for interest paid

The borrowing powers of an authorised investment fund are restricted by regulations made by the Financial Conduct Authority.

Interest paid treated as a loan relationship debit - FA96/S84 (1)

With effect from 28 April 1997 interest paid by an authorised investment fund is within the FA96 legislation on loan relationships and is allowable as a deduction in computing its profits for CT purposes.

Interest distributions treated as a loan relationship debit in accounting periods beginning on or after 1 April 2006

For accounting periods beginning on or after 1 April 2006 this also applies to amounts shown in the accounts as available for distribution as yearly interest (CTM48270). However, any loan relationship deficit cannot be carried back.

(In accounting periods beginning before 1 April 2006 interest distributions are instead allowed as a deduction in the computation of profits but cannot be used to create or increase any loss to be carried back.)