Jennifer Adams considers whether tax relief is available for interest paid on all loans taken out to fund a business.
At some time during the life of a business, that business may need funding, whether the monies come from the owner's personal resources or via a bank.
To ensure that the interest paid is tax-deductible, it is essential that not only is the loan 'wholly and exclusively' used for business purposes from the outset, but also throughout the borrowing period.
It is often the case that qualifying loans become non-qualifying loans without the borrower being aware.
Conditions
When the business is funded using borrowed money and that money is used for business purposes, the interest is allowable as a deduction to compute the trade profits.
A tax deduction can also be made where the money is used
