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HMRC internal manual

Oil Taxation Manual

Interest and Financing: The Debt Cap

The debt cap legislation can be found at Part 7 of TIOPA 2010 and it is effective for accounting periods beginning on or after 1 January 2010.

The legislation provides for the disallowance of certain financing expenses and for the exemption from the charge to Corporation Tax of certain financing income.

Where a company carries on a ring fence trade, and financing expenses or income are brought into account in calculating the profits of that trade, such amounts are excluded from being financing expense amounts or financing income amounts of the company for debt cap purposes (see TIOPA2010\S318 & CFM92560).