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HMRC internal manual

Savings and Investment Manual

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HM Revenue & Customs
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Relief for interest paid: interest relieved on a paid basis

Interest relieved on a paid basis

Relief under Chapter 1 Part 8 of ITA07 is given on a ‘paid’ basis so we are concerned only with the amount of interest actually paid, regardless of when it was or is due and payable.

Consequently, looking again at Example 2 at SAIM10070 it would not matter whether the payment pattern outlined arose from the terms of the loan or because the taxpayer defaulted in years 1 and 2.

Similarly in Example 1 at SAIM10070 it would not matter whether the taxpayer had to pay £50,000 in year 1 under the terms of the loan agreement or whether he had paid it ‘voluntarily’.