Related Commentary  Related HMRC Manuals

182  The normal method of calculating for the purposes of this Chapter the amount of interest that would be payable on a loan for a tax year at the official rate is as follows.

Step 1

Calculate the average amount of the loan outstanding during the tax year–

1.Find the maximum amount of the loan outstanding on the 5th April preceding the tax year or, if the loan was made in the tax year, on the date it was made.

2.Find the maximum amount outstanding on 5th April of the tax year or, if the loan was discharged in the tax year, on the date of discharge.

3.Add these amounts together and divide the result by 2.

Step 2

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