Tax deductibility of corporate interest | KPMG | UK

Tax deductibility of corporate interest: the new consultation

Tax deductibility of corporate interest

Daniel Head and John Monds take a look at HM Treasury’s latest consultation on the UK’s new interest deductibility rules.


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Following a consultation at the end of last year and the related announcements in the 2016 Budget, the Government has now published its second consultation on the tax deductibility of corporate interest expense. It is intended that this consultation will provide stakeholders with the opportunity to provide final comment on the proposed design and implementation of the new rules.

Prior to the publication of this second consultation document on 12 May 2016, the UK Government had announced certain headline features of the proposed new regime in the 2016 Budget. This confirmed the UK’s commitment to adopting the recommendations of Action 4 of the OECD’s BEPS project, and to the introduction of a new rule to restrict the tax deductibility of corporate interest by reference to a fixed ratio rule (FRR), to be set at 30 percent of EBITDA. High level details of the broader regime were also provided.

This latest consultation adds significantly more detail and discussion relating to the detailed design of the rules. Daniel Head and John Monds from KPMG in the UK have written an article for Tax Journal setting out more information on the consultation and the proposed design of the rules.

For further information please contact :

Daniel Head

John Monds



First published in Tax Journal on 20 May 2016. Reproduced with permission.


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