This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Corporate Finance Manual

Debt cap: overview: scope of the guidance

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

What this guidance is intended to do

This guidance explains how the legislation within TIOPA10/PT7 (Tax Treatment of Financing Costs and Income) is applied to large groups of companies where at least one of the group members is either a company resident in the UK for corporation tax purposes, or has a permanent establishment carrying on a trade in the UK. This legislation and related secondary legislation are referred to as the ‘debt cap’ rules.

The debt cap was repealed by Finance (No.2) Act 2017 with effect from 1 April 2017 when it was superseded by the Corporate Interest Restriction.  Draft guidance is available at:

Special rules apply where the period of account straddling 1 April 2017. See CFM93060 of the draft guidance for further details.  

The guidance is broken down into chapters, each dealing with different parts of the debt cap rules. It will enable you to

  • tell which groups are affected
  • work out what is a group for the purposes of the debt cap measure
  • calculate disallowances and exemptions
  • understand how groups are to account for disallowance and exemptions
  • deal with claims to exclude particular amounts from the debt cap rules, and
  • risk assess groups.