Income Tax (Interest Relief) Regulations 1982
| Jurisdiction | UK Non-devolved |
1982 No. 1236
INCOME TAX
The Income Tax (Interest Relief) Regulations 198231stAugust 1982
1stSeptember 1982
1stOctober 1982
The Commissioners of Inland Revenue, in exercise of the powers conferred on them by section 29(3) of the Finance Act 1982(a), hereby make the following regulations:
Citation and Commencement
1. These Regulations may be cited as the Income Tax (Interest Relief) Regulations 1982, and shall come into operation on 1st October 1982.
Interpretation
2.—(1) In these Regulations unless the context otherwise requires:—
"authorised officer" means the official registered by the Board as being authorised for the purposes of these Regulations by the lender;
"the Board" means the Commissioners of Inland Revenue;
"financial year" in relation to a lender means a period of 12 months or the period (not necessarily a period of 12 months) for which the lender makes up its accounts;
"lender" means a qualifying lender for the purposes of section 26;
"limited loan" means a loan to which either paragraph 5(1) or (2) or paragraph 24(3) of Schedule 1 to the Finance Act 1974(b) applies;
"a qualifying borrower" has the meaning given by Part III of Schedule 7;
"relevant loan interest" has the meaning given by Part I of Schedule 7;
"Schedule 7" means Schedule 7 to the Finance Act 1982;
"section 26" means section 26 of the Finance Act 1982;
"section 28" means section 28 of the Finance Act 1982;
"tax year" means a period of 12 months ending on 5th April.
(a) 1982 c. 39.
(b) 1974 c. 30.
(2) In the application of these Regulations to Scotland—
(a) "a freehold or leasehold estate" means any interest in land; and
(b) any reference to a loan on the security of such an estate is a reference to a loan upon a heritable security within the meaning of section 9(8)(a) of the Conveyancing and Feudal Reform (Scotland) Act 1970(a).
Loans which the borrower may bring within the tax deduction scheme
3.—(1) Loans the interest on which paid by a qualifying borrower is relevant loan interest are loans specified for the purposes of paragraph 7(1)(a) of Schedule 7 except—
(a) loans in respect of property which is used as the only or main residence of a dependent relative or former or separated spouse of his;
(b) loans in respect of living accommodation which is for him job-related within the meaning of the provisions of paragraph 4A(3) of Schedule 1 to the Finance Act 1974; or
(c) loans to which the provisions of sub-paragraphs (b), (c) or (d) of the said paragraph 7(1) apply.
(2) The lender shall send a copy of the notice sent to it under the said paragraph 7(1)(a) by the qualifying borrower to the Board within 30 days of receiving it.
(3) Where the borrower is unable to provide the lender with the notice to which the said paragraph 7(1)(a) refers he may, if he considers that the interest payable on his loan is or will be relevant loan interest, apply to the Board for a notice under paragraph 7(1)(b) of Schedule 7 and the Board shall notify him of their decision on his application.
Loans made before tax year 1983–84 which the lender may bring within the tax deduction scheme
4. Loans of the following descriptions, not being loans to which the interest on which paragraph 2(3) of Schedule 7 applies, are specified for the purposes of paragraph 7(1)(d) of Schedule 7—
(a) a loan secured on a freehold or leasehold estate in respect of property in relation to which the loan was granted in which the borrower (and in the case of joint borrowers each of them), or a dependent relative, or former or separated spouse of his, is residing at the time when the loan is made, or will so reside within 12 months of that time; being a loan
(i) which is not a limited loan (unless it is a limited loan in respect of which notice has been given to the Board under Regulation 7(1) before 1st December 1982);
(ii) in respect of which the lender has undertaken
(a) to inform the Board that it is a loan to which this Regulation applies together with the name and address of each borrower,
(a) 1970 c. 35.
and where known the Tax District to which he makes his return together with his tax reference; and
(b) to notify the borrower, not later than 30 days before the first payment of relevant loan interest falls due, that interest payable on the loan appears to be relevant loan interest; and
(iii) in respect of which the lender has not been notified that the interest is not relevant loan interest;
(b) a loan which is not a limited loan but otherwise qualifies for relief under the provisions of paragraph 24 of Schedule 1 to the Finance Act 1974.
Commencement of tax deduction scheme before tax year 1983–1984 in certain cases
5. Where the Board is satisfied that it is the practice for borrowers to have been given relief under section 75 of the Finance Act 1972(a) on the basis of amounts of interest paid to a lender in a period of 12 months ending after February but before 6th April and the lender, not being a lender within the provisions of paragraph 2(4) of Schedule 7, notifies the Board that it wishes the tax deduction scheme to begin to apply on a date before 6th April 1983 but not before 1st March 1983, the Board shall notify it of the date on which the scheme may begin to apply accordingly.
Application of tax deduction scheme to home improvement loans
6. Where before 1st December in any year a lender notifies the Board that it wishes home improvement loans which it has made to which paragraph 4(1)(b) of Schedule 7 applies to be brought within the tax deduction scheme, the scheme shall begin to apply to relevant loan interest payable on such loans in the tax year beginning in the next following year; but in the case of home improvement loans to be made on or after the date of the lender's notice to the Board it shall begin to apply from the date specified in the notice.
Application of tax deduction scheme to limited loans
7.—(1)(a) Subject to the provisions of sub-paragraph (b), where before 1st December in any year a lender notifies the Board that it wishes limited loans which it has made to be brought within the tax deduction scheme, the scheme shall begin to apply in the tax year beginning in the next following year to the relevant loan interest payable on those loans in respect of which the Board has given notice as provided by paragraph 7(1)(b) of Schedule 7; but in the case of limited loans to be made on or after the date of the lender's notice to the Board it shall begin to apply after the date specified in the notice, not being a date earlier than 30 days after the date of the lender's notice;
(b) within 30 days of the lender's giving such a notice the Board may notify the lender that the scheme shall not begin to apply in accordance with its notice and, where the Board so notifies the lender, the scheme shall begin to apply only on the date and to the loans which the Board has in writing authorised.
(a) 1972 c. 41.
(2) Where a lender has not so notified the Board under paragraph (1)(a) the tax deduction scheme shall not begin to apply in the following circumstances:—
(a) for the tax year 1983/84, in respect of interest on a loan which was a limited loan
(i) when the interest was last charged by the lender to the borrower's account in its records before February 1983, or
(ii) in the case of a loan made after January 1983, when the loan was made;
(b) for the tax year 1984–85 and subsequent tax years, in respect of interest on a loan which was a limited loan when the interest was last charged by the lender to the borrower's account in its records before March in the previous tax year.
Variation of repayment terms of certain loans
8.—(1) Expressions used in this Regulation have the same meaning as in section 28.
(2) Subject to the provisions of this Regulation the amount of each combined payment and the date on which it becomes due from a borrower, to whom a specified lender has given a notice under section 28(2)(a) to vary the terms of repayment of the loan, shall be notified to the borrower by the lender.
(3) The notice under section 28(2)(a) shall be in a form prescribed or authorised by the Board but shall not have effect unless—
(a) it contains a statement of the borrower's right under section 28(2)(b) to give a counter notice; and
(b) there is a period of not less than 30 days between the giving of the notice and the due date for the first of the combined payments to which the notice relates.
(4) A borrower shall be entitled to give a counter notice under section 28(2)(b) not later than 3 months after the due date for the first combined payment to which paragraph (2) above refers.
(5) On receipt of the borrower's counter notice under section 28(2)(b) the lender shall give notice to the borrower of—
(a) the amount of the combined payments which will be due from him after taking account of the requirements of section 28(4);
(b) the due date for the first such combined payment which shall be—
(i) where the borrower gives a counter notice under section 28(2)(b) within 30 days of the lender's notice under section 28(2)(a), the due date for the first combined payment to which paragraph (2) above refers; or
(ii) in any other case, a date not later than what, apart from the borrower's counter notice, would have been the date of the second of his combined payments falling due after the date of that counter notice;
(c) an estimate of the total period which, assuming there is no change in the amount of the borrower's combined payments, will be required to satisfy the principal and the interest on the loan by means of those payments; and
(d) a statement of the borrower's right under section 28(4) to make additional repayments of capital.
Repayment claims by lenders: introductory
9.—(1) Sums recoverable by a lender under section 26(7) shall be recovered on a claim to the Board for the purpose under these Regulations.
(2) Subject to paragraph (3) a claim shall be for the lender's financial year, and is referred to in these Regulations as an "annual...
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