Treasury closes avoidance loophole

The Treasury has slammed the door on avoidance schemes in which individuals claim tax relief on loans used to invest in partnerships or small companies.

The measures are intended to affect loans in which the deductibility of interest means the investor is guaranteed a profit.

Financial secretary Stephen Timms said he was acting after HMRC received notification of the avoidance arrangements.

In a statement to the Commons on the inclusion of a provision in the next finance bill, he said that, in future, interest will not be eligible for tax relief in these circumstances but undertook that the curb will not catch 'genuine commercial arrangements' where there is uncertainty as to the return on the investment.

Further reading:

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Finance bill attempts to close net on avoidance schemes