HMRC internal manual

Property Income Manual

PIM2105 - Deductions: main types of expense: fees for loan finance and similar items

Income Tax payers

Under sections 58 and 59 of the Income Tax (Trading and Other Income) Act 2005 (applied to property businesses by sections 272 and 272ZA), incidental costs incurred in obtaining loan finance for a rental business are generally deductible in computing rental business profits provided they relate wholly and exclusively to property let out on a commercial basis. These costs include loan fees, commissions, guarantee fees and fees in connection with the security of a loan. See BIM45800 for further guidance.

See PIM2010 for further guidance on “wholly and exclusively”.

Corporation Tax payers

If the customer is a company these costs will fall under the loan relationship rules.