»Ê¹ÚÌåÓýapp

This chapter applies for Income Tax purposes to the computation of trade profits and property income. References in the text to a ‘businessâ€� should therefore be taken to include both trades and property businesses. »Ê¹ÚÌåÓýapp chapter does not apply for Corporation Tax purposes, where there are separate rules in the loan relationships legislation (see CFM11000).

S564A-S564Y Income Tax Act 2007 (ITA 2007)

An alternative finance return arrangement can be used as an alternative to a conventional loan or to provide a return on a money deposit.

Part 10A ITA 2007 describes various types of alternative finance arrangement. »Ê¹ÚÌåÓýapp types that are used to provide funding for a trade or the purchase of its assets are purchase and resale arrangements and diminishing shared ownership arrangements. »Ê¹ÚÌåÓýapp effective cost of those types of funding (excluding arrangement fees or set-up costs) is described as an alternative finance return.

Where an alternative finance arrangement is entered into for the purposes of a business, the alternative finance returns paid under that arrangement are treated as an expense of that business in the same way as interest. In particular the ‘wholly and exclusively� test must be satisfied (see BIM45665).

A full description of alternative finance arrangements and the calculation of the alternative finance return is given in CFM44010 onwards.