Loan Relationships - Interest Income Flashcards
1
Q
What do the loan relationship rules establish?
A
Whether interest payable or receivable is classified as trading or non-trading
2
Q
If interest is classed as trading, what is it allowable or taxable under?
A
Trading income
3
Q
If interest is classed as non-trading, what is it allowable or taxable under?
A
NTLR
4
Q
When would an interest receivable be classed as trading?
A
If you are a money lender / trade is lending money
5
Q
When is an interest payable classed as non-trading?
A
Money to borrow investment activities, not trading activities e.g
- loans to buy a let property
- loans to buy other companies/investments
- overdue corporation tax
6
Q
What are some examples of trading interest payables?
A
- an overdraft
- loans to purchase plant and machinery
- loans to purchase buildings used in the trade
- loans/debentures to fund daily operations
