CFM97640 - Interest restriction: charities: group figures

This guidance applies for accounting periods beginning before 1 April 2023. For accounting periods beginning on or after 1 April 2023, TIOPA10/S382(1A) applies to exclude finance costs incurred by charities from the scope of tax-interest expense amounts.

Where a group contains a charitable company, the profits of the charity are likely to be excluded from being brought into account for the purposes of corporation tax.

In particular:

• CFM97620 explains the position where the exempted amounts are profits of a trade.
• CFM97630 explains the position where the exempted amounts are property income.

However, the group figures used for the CIR calculations are based on the group’s consolidated financial statements. As a result:

• The profits of a company’s charitable activities (before interest expense, tax, depreciation and amortisation) would be taken into account in computing the group-EBITDA.
• Interest expense and other financing costs of a charitable company would be taken into account in computing a group’s net group-interest expense (NGIE) and thence its adjusted net group-interest expense (ANGIE) and qualifying net group-interest expense (QNGIE).