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 property business are generally deductible in computing property business profits provided they relate wholly and exclusively to letting property which is not residential property. Incidental 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".

See PIM2054 for further guidance on finance costs of letting residential property.

Corporation Tax payers

If the customer is a company these costs will fall under the loan relationship rules. See the Corporate Finance Manual from page CFM30000 for further guidance.