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Tax aspects of debt structures

When it comes to borrowing money, it's important to understand the tax consequences of your funding structure.

For example, you'll need to know how much of your financing cost will be tax deductible, when those deductions will arise and whether you must deduct tax from payments to your lenders. As a lender, you'll need to know if and when your financing income will be taxable, and whether you'll have any tax deducted from your receipts.

Knowing your debts and helping you grow

You'll naturally want to focus on running and growing your business, not the complexities of tax legislation. Our approach is to explain how the rules apply to your fact pattern, how they might affect your business, and what you need to consider; and all in as much or as little detail as you need.

For example, your business might be changing the generally accepted accounting principles (GAAP) under which it prepares its accounts. We can review the effect on your company, let you know your options, and advise whether you should consider making tax elections.

HMRC is changing the rules on taxing corporate debt. Further restrictions on deducting financing costs are also likely following the Organisation for Economic Co-operation and Development's (OECD's) base erosion and profit-shifting initiative. We consult closely with HMRC and sit on working parties to discuss the proposals. So we're well placed to advise you on the changes and what you might need to do.