Interest you pay on a Credicorp business loan is a finance cost. In most cases, it qualifies as a deductible business expense for corporation tax purposes — reducing your taxable profit by the amount of interest paid. This page explains the basics and what records to keep.
Your specific tax position depends on your company's circumstances, accounting method, and the nature of the loan. Always confirm with your accountant or tax adviser before making decisions based on this guidance.
When business loan interest is deductible
HMRC allows a deduction for interest on a loan used wholly and exclusively for a business purpose. For a Credicorp loan, the deduction applies when:
- The loan is to your limited company, not to you personally.
- The funds were used for a genuine business purpose (which you confirmed in the Business Purpose Declaration you signed).
- The interest has actually been paid in the accounting period.
How much can you deduct?
You can deduct the actual interest paid, plus the establishment fee (which is a finance cost). For a Credicorp loan of £500 at 0.25% per day over 84 days, the interest is £105 and the fee is £5 — so £110 is deductible against corporation tax if the loan was for a qualifying business purpose.
What documents to keep
- Your loan agreement — shows the loan amount, interest rate, and term.
- Your Key Information Sheet (KIS) — shows the total cost of credit and total interest.
- Monthly statements — show interest accrued and paid in each period.
- Your Business Purpose Declaration — confirms the loan was for a business purpose (relevant if HMRC ever queries the deduction).
All of these are downloadable from your portal under Loan documents and Statements.
Credicorp Flex and ongoing accrual
For a Flex facility, interest accrues daily on the outstanding balance. The deductible amount in any accounting period is the interest actually paid during that period. Your monthly statements show interest paid; reconcile these against your books at the year-end with your accountant.
The establishment fee
The £5 establishment fee is a finance cost incurred in obtaining the loan. It is treated in the same way as interest — deductible against corporation tax in the period it was paid.
What if the loan funded mixed business and personal use?
Credicorp loans are for business purposes only, and you signed a Business Purpose Declaration confirming this. If you used the funds partly for personal purposes (which would have been a misuse), HMRC would typically apportion the deduction — but this situation should not arise given the declaration you signed.
See also: Keeping records for your accountant, How to reconcile statements against your books, How to download your statements.