I've borrowed £200,000 from my wife to buy a business and she is charging me interest on the loan. Can I deduct these interest payments as an allowable expense? 

Arthur Weller replies: 

Yes, you can deduct these interest payments as an allowable expense if the loan is properly documented. However, because your lender is your wife, you need to be doubly sure that: (a) the £200,000 is used wholly and exclusively for the purposes of the business; (b) you (or your business) are legally obligated to pay the interest; (c) the interest is not a personal expense or payment for something outside the business; (d) the interest she receives is taxable income in her hands and should be declared to HMRC on her personal tax return; and (e) the rate of interest charged should be a commercial rate, and not exceed what a third party might expect to charge.