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250A Restriction of relief to individuals in respect of loans applied in acquiring interest in companies.

(1) In this section—

“distribution” has the same meaning as it has for the purposes of the Corporation Tax Acts by virtue of section 4;

“eligible loan” in relation to an individual and a company, means a loan, being a loan to which section 248 applies, to the individual to defray money applied for any of the purposes specified in that section;

“relevant interest” has the same meaning as in section 269;

“residue of expenditure” shall be construed in accordance with section 277;

“specified amount” in relation to an eligible loan, means the amount of the eligible loan or so much of the eligible loan where the money or, as the case may be, part of the money which was defrayed by that loan and which was applied by the individual—

(a) is used after 1 January 2003 by the company directly or indirectly—

(i) in the acquisition (whether by the company or by any other person) of the relevant interest in relation to any capital expenditure incurred or deemed to be incurred on the construction or refurbishment of a specified building,

(ii) in replacing money used in such acquisition of such an interest, or

(iii) in paying off a loan used in such acquisition of such an interest,

(b) pays off another eligible loan or so much of another eligible loan where the money or, as the case may be, part of the money which was defrayed by that other loan (or any previous loan or loans which it replaced) and which was applied by the individual was used after 1 January 2003 by the company directly or indirectly for any of the purposes referred to in paragraph (a), or

(c) was applied in acquiring, on or after 20 February 2004, any part of the ordinary share capital of a company at least 75 per cent of whose income consists of profits or gains chargeable under Case V of Schedule D in respect of one or more specified buildings;

“specified building” means a building or structure, or a part of a building or structure—

(a) (i) which is or is to be an industrial building or structure by reason of its use or deemed use for a purpose specified in section 268(1) and in relation to which an allowance has been, or is to be, made to a company under Part 9, or

(ii) in relation to which an allowance has been, or is to be, so made to a company by virtue of Part 10 or section 843 or 843A,

in respect of—

(I) the capital expenditure incurred or deemed to be incurred on the construction or refurbishment of the building or structure or, as the case may be, the part of the building or structure, or

(II) the residue of that expenditure,

(b) in relation to which at any time beginning on or after 1 January 2003 the company referred to in paragraph (a) is entitled to the relevant interest in relation to the capital expenditure referred to in that paragraph, and

(c) in relation to which any other company (not being the company referred to in paragraph (a)) is entitled, at any time subsequent to the time referred to in paragraph (b), to an allowance under Part 9, in respect of the capital expenditure referred to in paragraph (a) or the residue of that expenditure, following the acquisition of the relevant interest or any part of the relevant interest in relation to that capital expenditure, whether or not, subsequent to the time referred to in paragraph (b), any other person or persons had previously become entitled to that relevant interest or that part of that relevant interest;

“specified provisions” means section 248 and that section as extended by section 250.

(2) Notwithstanding anything in the specified provisions, relief under section 248 for any year of assessment in relation to any payment or payments of interest on the specified amount of an eligible loan by the individual concerned shall not exceed that individual’s return from the company concerned in that year in relation to that specified amount.

(3) Subject to subsection (4), an individual’s return from a company in relation to a specified amount of an eligible loan in any year of assessment is—

(a) where the specified amount defrays an amount of money applied by the individual for the purpose specified in section 248(1)(a) or (b), the amount, if any, of the distributions (before deduction of any dividend withholding tax under Chapter 8A of Part 6), or, as the case may be, the amount, if any, of the interest, received by the individual from the company in that year as a result of the application by the individual of that amount of money, or

(b) where the specified amount defrays an amount of money applied by the individual, directly or indirectly, in paying off the specified amount of another eligible loan where the earlier specified amount defrayed an amount of money (subsequently referred to in this paragraph as “that earlier amount of money”) which was applied by the individual for the purpose specified in section 248(1)(a) or (b), the amount, if any, of the distributions (before deduction of any dividend withholding tax under Chapter 8A of Part 6), or, as the case may be, the amount, if any, of the interest, received by the individual from the company in that year as a result of the application by the individual of that earlier amount of money.

(4) In determining for the purposes of this section—

(a) the amount of any payment or payments of interest by an individual on the specified amount of an eligible loan, or

(b) the amount of interest received by an individual as a result of the application by the individual of an amount of money which was defrayed by the specified amount of an eligible loan,

such apportionment, where necessary, of the total payments of interest by the individual on the eligible loan, or, as the case may be, the total amount of interest received by the individual as a result of the application of all the money defrayed by the eligible loan, shall be made in the same proportion which the specified amount of the eligible loan bears to the amount of the eligible loan.

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