REV BN 10: Deductibility of Interest
Who is likely to be affected?
1. Employers and contractors in the construction industry who incur interest on overdue items such as tax and National insurance contributions (NICs).
General description of the measure
2. The measure removes inconsistencies in the treatment for tax purposes of interest paid by employers on overdue PAYE, NICs, student loans etc., and by contractors in the construction industry on overdue tax and NICs, in computing income, profits, etc for tax purposes. The measure formalises current and accepted practice.
Operative date
3. Accounting periods ending on or after 9 April 2003.
Current law and proposed revisions
4. Currently, the interest incurred on overdue payments of items such as tax, and NICs is usually non-deductible in calculating income/profits for tax purposes. This measure reflects that current and accepted practice in legislation. The following legislation will be amended:
- Section 566 Income and Corporation Taxes Act 1988;
- Paragraph 6 of Schedule 1 Social Security Contributions and Benefits Act 1992 and the Social Security Contributions and Benefits (Northern Ireland) Act 1992;
- Section 22 Teaching and Higher Education Act 1998; and
- Article 3 Education (Student Support)(Northern Ireland) Order 1998.
Further advice
5. If you have any questions about this change, please contact the Public Enquiry Unit on 020 7438 6420 to 6425.
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