The much anticipated update to the draft legislation on the new corporate interest restriction has been published for comments.
On 26 January, the Government published updated draft legislation on the new corporate interest restriction rules which will take effect from 1 April 2017. This new draft legislation supersedes the draft legislation originally published on 5 December 2016 as part of the draft Finance Bill 2017 clauses, and contains information on the remaining elements of the rules.
The update extends the draft legislation to a total of 132 pages and includes the draft legislation for the following key aspects of the new regime:
Our team is working through the significant amount of detail set out in the draft legislation. However, initial observations are that certain policy changes have been made in response to comments received on the initial draft that was issued in December. These include:
In addition, the Government has clarified that if a group has aggregate net tax-interest income for a period, that amount may then be added to the interest allowance for that period. This will allow the carried forward interest amounts that can potentially be deducted in subsequent periods to be increased by the amount of net tax-interest income.
Consequential amendments to regulations for Authorised Investment Funds, Investment Trust and Securitisation Companies will be published separately in draft for comment.
The Government has requested that any outstanding comments on the original material published on 5 December 2016 (where still relevant) should be provided by the original deadline of 1 February. Any comments on the new draft legislation should be provided by 23 February.
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