Taxes Consolidation Act 1997 section 835AAG

Interpretation (Chapter 3)

Section 835AAG defines key terms used in the interest limitation rules, including "group EBITDA", "group exceeding borrowing costs", and the "group ratio", and sets out how these are calculated for single company worldwide groups.

• The group ratio is the group's net borrowing costs divided by its group EBITDA, expressed as a percentage, and may be substituted for the standard 30% EBITDA limit where it is higher.
• Group EBITDA is the consolidated profit or loss before tax, interest, depreciation, amortisation, and impairments, excluding amounts relating to qualifying long-term infrastructure projects.
• Group exceeding borrowing costs is the net finance expense in the consolidated financial statements, again excluding amounts relating to qualifying long-term infrastructure projects.
• Where a single company worldwide group applies the group ratio, transactions with associated enterprises are stripped out, and anti-avoidance rules apply to prevent manipulation of those adjustments.