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HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
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Other expenses: interest paid: example

A university lecturer acquires a computer on 6 April 2003 for research purposes. The requirements of EIM70790 are met and she is entitled to capital allowances. The computer cost £6,000 and was financed by a loan on which she paid interest of £600 in 2003/04. 25% of her use of the computer is for private purposes. She is entitled to capital allowances to the extent of the business use, see EIM36570. The computation for 2003/04 would be:

  £        
           
Cost 6,000   Business element   Allowance due
WDA (25%) 1,500   (75% x 1,500) = 1,125
Residual value 4,500        

Relief is available to the same extent for interest paid.

75% x £600 = £450

Relief for £450 is available against general income.