Part 8

Other reliefs
Chapter 1

Interest payments

Loans for plant or machinery

Loan to buy plant or machinery for partnership use
388
1
This section applies to a loan that is used for capital expenditure on the provision of plant or machinery to which subsection (2) applies.
2
This subsection applies to plant or machinery if—
a
it is in use for the purposes of a trade, profession or ... property business carried on by a partnership, and
b
the partnership is entitled to a capital allowance or liable to a balancing charge in respect of it under section 264 of CAA 2001 (partnership using property of a partner) for the period of account in which the interest is paid.
3
A partnership is treated as entitled to a capital allowance or liable to a balancing charge in respect of plant or machinery for a period of account (“the later period”) for the purposes of subsection (2)(b) if—
a
it has been so entitled or liable for a previous period of account, and
b
no disposal value has been brought into account in respect of it in the later period or any earlier period of account.
4
In this section and sections 389 and 390—
- “capital expenditure” has the meaning given in section 4 of CAA 2001,
- “period of account” has the same meaning as in that Act (see section 6(2) to (6) of that Act), and
- “property business” has the same meaning as in Part 2 of that Act (see section 16 of that Act).
Word in s. 388(2)(a) omitted (in relation to the tax year 2025-26 and subsequent tax years) by virtue of Finance Act 2025 (c. 8), Sch. 5 paras. 3(4)(a), 12(1) (with Sch. 5 paras. 15, 16, 18(4), 19)
Words in s. 388(4) substituted (in relation to the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), Sch. 5 paras. 3(4)(b), 12(1) (with Sch. 5 paras. 15, 16, 18(4), 19)