CFM44310 - Deemed loan relationships: alternative finance: other tax rules: deduction of tax

Alternative finance arrangements and deduction of tax

Once it has been determined that the return under an alternative finance arrangement is to be treated for tax purposes in the same way as interest then ITA07/S564M applies the following relevant legislation to the amount treated as interest.

  • For periods up to 5 April 2016 ITA07/S851 (payments to be made subject to deduction of tax) applied to alternative finance return and profit share return as it did to interest - see CTM35205 onwards.
  • ITTOIA05/S373 (interest distributions by collective investment schemes - a reference to interest distribution includes a reference to alternative finance return).
  • For periods up to 5 April 2016 ITA07/S851-S857 (deduction of tax from interest payments on relevant investments).
  • ITA07/S939 and ITTOIA05\S380 (funding bonds), references to interest include references to alternative finance return and profit share return.
  • CTA09/S443 (restriction of relief for payments of interest) applies to alternative finance return and profit share return as is does to interest (repealed for arrangements on or after 18 November 2015).
  • CTA09/S494(1)(a) (collective investment schemes) applies to alternative finance return and profit share return as it does for money placed at interest for the purpose of the non-qualifying investment test for company holdings in unit trusts and offshore funds.