This guidance note deals with the calculation of tax-EBITDA, which is required for both the calculation of the fixed ratio method and the group ratio method under the CIR rules. For a general overview of the regime, see the Introduction to the corporate interest restriction guidance note.
HMRC has published guidance on the new rules for its Corporate Finance Manual, and references in this guidance note are to the Corporate Finance Manual. The latest version, published on 28 February 2018, includes commentary on additional technical changes to ensure the regime works as intended, which are contained within Finance Act 2018, s 24 and Schedule 8.
The first step in both the fixed ratio method and the group ratio method limits interest relief by reference to a proportion of the group's aggregate tax-EBITDA. In broad terms, aggregate tax-EBITDA is a measure of the group's earnings that are within the UK tax net before interest, taxes, depreciation and amortisation, all measured using UK tax principles. TIOPA 2010, s 405