Income and Corporation Taxes Act 1970

190 Interest on loans to purchase machinery or plant

(1) Subject to the provisions of this section, where the holder of an office or employment—

(a) is under Chapter II of Part I of the [1968 c. 3.] Capital Allowances Act 1968 entitled to a capital allowance, or liable to a balancing charge, for any year of assessment in respect of machinery or plant belonging to him and in use for the purposes of the office or employment, and

(b) pays interest in that year on a loan to defray money applied as capital expenditure on the provision of that machinery or plant,

there may be deducted from the emoluments to be assessed for that year the amount of the interest so paid.

(2) No relief shall be given under this section in respect of interest falling due and payable more than three years after the end of the year of assessment in which the debt was incurred, or in respect of interest at more than a reasonable commercial rate.

(3) Where the machinery or plant is in use partly for the purposes of the office or employment and partly for other purposes, section 28 of the Capital Allowances Act 1968 (part-time use) shall apply in relation to relief under this section as it applies in relation to writing-down allowances.

(4) Where credit is given for any money payable to defray any capital expenditure, that shall be treated for the purposes of this section as the making of a loan to defray that capital expenditure.

(5) Section 63 of this Act (overdrafts) shall have effect as if this section were included in sections 57 to 61 of this Act.