½Û×ÓÊÓƵ

The taxation of corporate debt in the UK is complex. There are several different sets of rules governing the amount and timing of tax deductions available for interest and other amounts relating to corporate debt. These include:

1. •

   the loan relationships regime

2. •

   transfer pricing requirements

3. •

   the corporate interest restriction

Of these, only the loan relationships regime is likely to apply to the typical owner-managed business (OMB) and is outlined briefly below.

The transfer pricing rules contain a number of exemptions such that, in practice, they are unlikely to apply to the typical small OMB. The rules do not apply to all small and medium-sized enterprises (SMEs), ie enterprises with fewer than 250 employees and turnover of no more than EUR 50 million, or assets of no more than EUR 43 million. Dormant companies are also excluded from the regime. Although note that from 6 April 2019, the profit fragmentation rules may apply instead. These operate in a similar manner to the transfer pricing regime, and will ensure that where profits of a UK