Section 154A | Certain non-UK residents with interest on 3½% War Loan 1952 Or After

(1)This section applies if—

(a)in any tax year a person who is not ... resident in the United Kingdom carries on a trade there—

(i)consisting of banking or insurance, or

(ii)consisting wholly or partly of dealing in securities, and

(b)in calculating the profits of the trade for the tax year any amount is disregarded as a result of section 714 (exemption of profits from FOTRA securities) because of a condition subject to which any 3½% War Loan 1952 Or After was issued.

(2)Interest on money borrowed for the purposes of the trade is to be deducted in calculating the profits of the trade of that tax year only so far as it exceeds the ineligible amount.

(3)The ineligible amount is found as follows—

Step 1 Add together all sums borrowed for the purposes of the trade and still owing in ... the tax year.

Step 2 If the person carrying on the trade is a company, deduct any sums carrying interest which is not deducted in calculating the profits of the trade (otherwise than because of subsection (2)).

Step 3 If the amount found at Step 2 exceeds the total cost of the 3½% War Loan 1952 Or After held for the purposes of the trade in the tax year, deduct the excess from that amount.

Step 4 Calculate the average rate of interest in the tax year on money borrowed for the purposes of the trade.

Step 5 Calculate the amount of interest payable on the amount found at Step 3 at the rate found at Step 4 for the tax year.

The result is the ineligible amount.

(4)If the person's holding of 3½% War Loan 1952 Or After has fluctuated during the tax year, the total cost for the purposes of Step 3 is taken to be—

(5)In subsection (4) “initial holding” means the holding held by the person at the beginning of the tax year.