An employee is entitled to relief for interest paid on a loan to
purchase machinery and plant if capital allowances are due in
respect of that purchase. The conditions that must be met are
listed at RE402.
The conditions that must be met before an employee is
entitled to capital allowances on machinery and plant are explained
at
EIM36500.
If the machinery and plant is used partly for business
purposes the relief for interest should be restricted to the same
extent as the capital allowances are restricted. This is
illustrated by example
EIM32861.
Employees are
not entitled to loan interest relief for a car,
van, motor cycle or bicycle after 5 April 2002. This is because
employees are not entitled to capital allowances after that date,
see
EIM36520. For 2002/03 onwards relief for
the costs of using their own vehicle for business travel can only
be given by mileage allowance relief, see
EIM31330 onwards.
