Taxes Consolidation Act 1997 section 248A

Restriction of relief in respect of loans applied in acquiring interest in companies and partnerships

Section 248A restricted interest relief on loans used, directly or indirectly through a company or partnership, to fund the purchase, improvement or repair of rented residential property.

• Where a loan qualifying for relief under section 247, 248 or 253 was used on or after 7 May 1998 to fund the purchase, improvement or repair of a residential property that was rented out, interest relief was reduced to the extent the loan related to that property.
• The restriction did not apply to interest accruing on or after 1 January 2002, so in practice the provision ceased to have effect from that date.
• However, the restriction was reinstated for interest on a loan used to purchase a rented residential property from the spouse or civil partner of the person claiming relief under section 248 or 253.
• The spousal/civil partner restriction did not apply where the couple were legally separated, divorced, or where a civil partnership had been dissolved.