The incidental costs of acquiring finance can be deducted in computing the profits of the business and should be claimed. Costs which may be allowable include:
• legal and professional expenses associated with negotiating the loan and preparing the documents;
• underwriting commissions, brokerage and introduction fees;
• land registry fees;
• search fees;
• valuer’s fees;
• commitment fees for making a loan available;
• commission(s) for guaranteeing a loan.
Example:
Hamish takes out a bank loan to fund the expansion of the business. He incurs professional fees of £500 in connection with the loan and pays an arrangement fee of £200.
He is able to deduct £700 in respect of these expenses when computing his business profits.
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