A green light for restrictions on interest deductibility

Alongside some unexpected announcements in the recent Budget, there came a rather less surprising but nonetheless very significant confirmation. Following the government’s consultation launched in October 2015 and the OECD’s base erosion and profit shifting (BEPS) project recommendations under Action 4, the government intends to proceed with large scale alterations to the rules on the tax deductibility of interest for companies. The legislation to effect these changes will be included in Finance Bill 2017, with a slated commencement date of 1 April 2017. However, significant concerns remain for taxpayers and tax advisers alike about the detailed implementation of the proposed changes, the creation of even more complexity in the UK’s tax code and the likely substantial impact on a wide variety of structures.