CFM92415 | Debt cap: the available amount: finance expenses included in the available amount

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

What financing expenses are included in the available amount

TIOPA10/S332(1) (a)-(f) sets out the amounts that are included within the available amount. The available amount is calculated by totalling the amounts disclosed in the financial statements of the worldwide group for the period. This will be the sum of the disclosed amounts in respect of:

• interest payable on borrowing

• amortisation of discounts relating to borrowing

• amortisation of premiums relating to borrowing

• amortisation of expenses ancillary to borrowing

• the financing expense implicit in payments made under finance leases, and

• the financing expense relating to debt factoring.

This list is extended by regulations, see CFM92460, CFM92435 and CFM92492.

For advice on amortisation of discounts and premiums and interest payable see below, for advice on expenses ancillary to borrowing and financing expenses for finance leases and debt factoring see CFM92430.

If the group includes a securitisation company then TIOPA10/S332A operates so that the available amount is calculated as if the securitisation company were not a member of the worldwide group. This excludes from the available amount the interest, discount etc. on the securitisation company’s borrowing. A company is a securitisation company if it meets one of the criteria in FA2005/S83(2) or CTA10/S623 at any time during the period of account of the worldwide group. Advice on the taxation of securitisation companies can be found at CFM72000.

Interest payable

This comprises the interest expense associated with all amounts borrowed by the group, whether the borrowing is long-term or short-term, and whether the funding comes from a loan or from the issue of securities. It does not include interest payable on debts that do not represent ‘borrowing’, for example interest on overdue payments for goods or services.

This should not include any amounts paid or payable by one group member to another where both are consolidated within the financial statements of the worldwide group.