248A Restriction of relief in respect of loans applied in acquiring interest in companies and partnerships

Summary

This is an anti-avoidance measure to prevent persons getting round the former bar on relief for interest against rental income from a residential property by routing the borrowed money through a company or partnership.

Details

(2) It provides that where the money from a loan on which the interest would qualify for relief under either section 247, 248 or 253 is subsequently used, on or after 7 May, 1998, to purchase, improve or repair property or to redeem a loan which was used for those purposes, the relief to be given in respect of interest on that loan for any year in which the property is rented residential property was reduced to the extent that the loan was used in connection with that property.

(3) This section does not apply to interest referred to in subsection (2) which accrues on or after 1 January, 2002.

(4) The bar on relief is re-instated as respects interest (accruing on or after 6 February 2003) on a loan used to purchase the let residential property from the spouse or civil partner of the individual to whom relief is given under section 248 or 253.

(5) The disallowance of interest relief where the rented property is purchased from a spouse or civil partner does not apply in the case of legally separated persons, individuals who are divorced, civil partners who have separated under a deed of separation or other legally enforceable agreement, or where the civil partnership has been dissolved.

Relevant Date: Finance Act 2021