The interest barrier rules are finally to be enacted in the second Finance Act of 2017, with their original effective date of 1 April 2017. Some welcome changes have been made to certain aspects of the rules since earlier drafts. In particular, the narrowing of the concept of ‘related party’ debt means the group ratio rule is now a genuine, rather than purely theoretical, alternative to the fixed ratio rule for more highly geared groups. However, the rules remain complex and are expected to increase substantially the compliance burden for a number of large businesses.
