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HMRC internal manual

Corporate Finance Manual

Debt cap: intra-group short-term debt: corresponding exclusion of finance income

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

Financing income amounts are also excluded

Where the paying and receiving group companies make an election under TIOPA10/S319 to treat amounts as not being financing expense amounts for the purposes of TIOPA10/S320 ensures that the amount in the hands of the receiving company is not a financing income amount. This means that the amount in question is not included in the calculation of a UK group company’s net financing income or, as the case may be, a relevant group company’s calculation of its net financing deduction.


Company A and company B are both members of a worldwide group. Company A pays an amount of £5 million interest to company B on a short-term debt, and both jointly elect that the amount is treated as not being a financing expense amount of company A. The £5 million interest received by company B is similarly not treated as being a financing income amount of company B.