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Part A: Explaining the tests for debt and equity interests

The debt and equity rules determine, for tax purposes, what is equity in a company and what is debt in an entity.

Last updated 18 November 2025

Determining whether an interest is a debt interest

The are 5 essential elements required to satisfy the debt test.

Determining whether an interest is an equity interest

The 4 items that determine when a scheme will give rise to an equity interest.

Additional concepts and rules in relation to the debt and equity tests

How related schemes, non-equity share interests, connected entities and small business at call loans are dealt with.

Consequences of the debt and equity rules

How the debt and equity rules affect thin capitalisation, international tax and trusts.

QC36047