CHAPTER 2

Credit return

Overview

This chapter sets out the tax treatment of “credit returns” and “credit transactions”.

267O Treatment of credit return

Summary

This section sets out the tax treatment of “credit returns”.

Details

(1) A “credit return” is to be treated for all the purposes of the Tax Acts as if it were interest on a loan or other security. The subsection is made subject to section 130 so as to ensure that any “credit return” which is similar to a distribution will not be treated as interest.

(2) The amount of the “credit return” shall not be regarded as expenditure on an asset for the purpose of calculating a capital allowance, balancing allowance or charge due on that asset.

(3) The amount of the “credit return” shall not be regarded as expenditure on an asset for the purpose of section 552. This ensures that the amount of the credit return will not be included in the purchase price of an asset for the purpose of computing a capital gain on the asset.

Relevant Date: Finance Act 2019