Finance Interest Relief/Restrictions

Has anyone looked into the rental income finance restrictions for discretionary trusts for 2017/18 and how it corresponds with the tax pool. The basic rate reduction is available to the trustees in a similar manner as to individuals and is a tax reducer.

Using Digita, it seems as though the total tax (before the tax reducer) is added to the tax pool. I would have thought this should be the tax after the tax reducer as this is what is being “paid” by the trustees as per the legislation.

I also note that the guidance from HMRC seems to be incorrect (SA951 for 2018) as the tax charged goes into the tax credit pool and does not take into account the tax reducer for property finance interest.

I’ve spoken with LexisNexis on this issue and they concur with me that HMRC’s guidance seems incorrect and will open dialogue with them on this point.

Dan Mundroina

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