Knowledgebase Support HMRC Useful links
Knowledgebase home
Tax Return Production
Accounts Production
Client Hub
Practice Management
VAT Filer
Anti-Money Laundering
Support home
Hot Topics
SimpleStep Guides
Release Notes
Known Issues

HMRC Status
Useful Links
Accountancy Practices
and Tax Advisors
Individuals, Businesses, Trusts
and Partnerships
Client Hub
Accounts Production
Tax Return Production
VAT Filer
Company Incorporator
Companies House Forms
Companies House Integration
GDPR Centre
eSign Centre

AML Identity Checking
Limited Company

VAT Filer for Business

Why am i not receiving basic rate relief for finance costs?

Article ID: 2775
Last updated: 05 Dec, 2018

The HMRC guidance document confirms the below have to be applicable for the relief to be available:

Individuals will be able to claim a basic rate tax reduction from their Income Tax liability on the portion of finance costs not deducted in calculating the profit. In practice this tax reduction will be calculated as 20% of the lower of the:

  • finance costs not deducted from income in the tax year (25% for 2017 to 2018, 50% for 2018 to 2019, 75% for 2019 to 2020 and 100% thereafter)
  • profits of the property business in the tax year
  • total income (excluding savings income and dividend income) that exceeds the personal allowance (PA) and blind person’s allowance (BPA) in the tax year

Therefore if there is no property profit, you will not be eligible for the relief OR if the total income (excluding savings income and dividend income) is lower than the PA and BPA in the year, this would not be available either.

Outside of this, if relief is being applied to the return, you may need to look at the HMRC restriction calculation as below:

HMRC restrict the relief to the lower of the ‘Adjusted Total Income’ and the ‘Allowable Amount’. The allowable amount being the amount entered in box 44 on the tax return. The calculation that HMRC apply is Adjusted Total Income is calculated as Net Income - (Savings income + Dividend income + Allowances). Adjusted income can be found in box A115 on the HMRC tax calculation summary in Section 4.

Article ID: 2775
Last updated: 05 Dec, 2018
Revision: 4
Views: 66
This article was:  

Also listed in
folder Tax Return Production -> SA100 Individual Return