Tax credit and Interest rate risk: Difference between pages

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1.  
(IRR).


A reduction in a tax liability, directly reducing the net amount of tax payable.
The risk associated with a change in interest rates.  


For example, the tax credit under a tax 'imputation system' which wholly or partially imputes to the shareholders some of the corporation tax paid by companies on the income out of which dividends are paid.


This may take several forms in the treasury context.


2.
For example, and depending on the direction of the change:
*Increasing interest cost
*Falling interest income
*Changing market value of debt, or of pension liabilities
*Differences in competitiveness
*The changing nature of a market when interest rates change
*Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.


Less commonly, a smaller indirect reduction in a tax liability, by way of a deduction from the net taxable profits.


Sometimes written 'interest-rate risk'.


3.
Not to be confused with Internal Rate of Return, which is also abbreviated to ''IRR''.


''UK personal tax''. 


A payment from the UK tax authorities to an individual with childcare responsibilities, low income, or both.
== See also ==
* [[Asset-liability management]]
* [[Cross-currency interest rate swap]]
* [[Double-whammy]]
* [[Duration]]
* [[Exposure]]
* [[Fair value interest rate risk]]
* [[Financial covenant]]
* [[Forward rate agreement]]
* [[Guide to risk management]]
* [[Internal rate of return]]
* [[Interest cover]]
* [[Interest rate]]
* [[Interest rate cap]]
* [[Interest rate collar]]
* [[Interest rate exposure]]
* [[Interest rate floor]]
* [[Interest rate futures]]
* [[Interest rate gap]]
* [[Interest rate guarantee]]
* [[Interest rate option]]
* [[Interest Rate Risk in the Banking Book]]  (IRRBB)
* [[Interest rate shock]]
* [[Interest rate swap]]
* [[IRHP]]
* [[Matching]]
* [[Pipeline risk]]
* [[Portfolio hedging]]
* [[Risk-free rate of return]]
* [[Risk-free rates]]
* [[Shock]]
* [[Time bins]]
* [[Treasury]]




== See also ==
== Other resource ==
* [[Credit]]
 
* [[Credit relief]]
[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]
* [[Deductions]]
* [[Dividend]]
* [[Expense relief]]
* [[Foreign tax credit]]
* [[Imputation system]]
* [[Income Tax]]
* [[Tax relief]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Manage_risks]]

Latest revision as of 06:49, 19 March 2024

(IRR).

The risk associated with a change in interest rates.


This may take several forms in the treasury context.

For example, and depending on the direction of the change:

  • Increasing interest cost
  • Falling interest income
  • Changing market value of debt, or of pension liabilities
  • Differences in competitiveness
  • The changing nature of a market when interest rates change
  • Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.


Sometimes written 'interest-rate risk'.

Not to be confused with Internal Rate of Return, which is also abbreviated to IRR.


See also


Other resource

The devil is in the detail, The Treasurer, 2015

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