Taxes Consolidation Act 1997 section 267O

Treatment of credit return

Section 267O sets out the tax treatment of credit returns arising from Islamic finance transactions.

• A credit return is treated as if it were interest on a loan or a security for all purposes of the Tax Acts, subject to the distribution rules in section 130.
• This treatment means the credit return is chargeable to tax in the same way as interest.
• The amount of a credit return cannot be treated as expenditure on an asset for the purpose of claiming capital allowances, balancing allowances or balancing charges.
• The amount of a credit return cannot be treated as expenditure on an asset for the purpose of computing a capital gain under section 552.