Jurisdiction(s):
United Kingdom

Key definition

Debt definition

What does Debt mean? Debt, in pensions practice, is the sum an employer must pay to an occupational defined benefit pension scheme to meet any funding shortfall when the employer ceases to participate or the scheme winds up. In England & Wales and Scotland, this employer debt (commonly the section 75 debt) is a statutory liability under section 75 of the Pensions Act 1995 and the Occupational Pension Schemes (Employer Debt) Regulations 2005. It is typically calculated on a buy-out basis (the estimated cost of securing members’ benefits with an insurer) and becomes immediately due to the trustees on a trigger such as...

UK worldwide debt cap (repealed 2017): corporation tax disallowance of financing expenses and exemption of finance income, gateway test and allocation/compliance statements—archived

Published by a LexisNexis Tax expert

Practice notes

ARCHIVED :

This Practice Note is archived and is no longer maintained. From 1 April 2017, the worldwide Debt cap Rules were repealed and superseded by the corporate Interest restriction (CIR) rules. Accordingly, the worldwide debt cap described here should be treated as relevant only for periods before 1 April 2017, being the date the CIR took effect. For any period straddling that date, the debt cap should be applied to a notional period ending on 31 March 2017. For more on the CIR, which replaces and repeals the debt cap, see Practice Note: Corporate interest restriction. Relief for finance costs of UK-resident companies that are members of large groups may be restricted (ie disallowed) where, broadly, the group’s UK-based net debt exceeds 75% of the group’s gross debt (the gateway test). The debt cap applies to periods of account beginning on or after 1 January 2010. The provisions that bring about the restriction are often termed the worldwide debt cap regime (although it is possible that the regime will apply to a group comprised...

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Web page updated on 22/05/2026

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