Interest Rates, Repayment and Default on Loans

Interest rates imposed by a bank can be either fixed or floating (i.e. set by reference to bank base rates). When you pay interest to most major banks in the U.K, it is paid gross (without deduction of tax) but if the lender is not a recognised bank it is paid net of tax. Bank interest which you pay on trading loans is normally allowable against your taxable profits, as are the costs of raising loan finance.