Tax relief to be removed on loans

Loans in Guernsey for anything other than houses or home improvements will soon not be eligible for tax relief.

Following changes to the island's tax regime, loans for luxury items will not be allowable after 1 January 2008.

Any loans taken out for reasons including holidays, boats or cars will not be given tax relief, even if the loan was taken out earlier.

Relief will be available for renovations or extensions but only on interest payable on the first £400,000.

Income tax administrator Ken Forman said people's belief they can take out a loan before the end of the year in order to claim relief on interest paid is incorrect.