Debt writedowns could be eligible for 33% capital acquisitions tax

Debt written down as part of a mortgage arrears resolution process could be eligible for capital acquisitions tax at a rate of 33%.

Under legislation, debt written down as part of a personal insolvency arrangement or a debt settlement agreement is exempt from capital acquisitions tax.

However, there is no exemption for debt written down by a bank under the process and consequently this would be taxable under self-assessment, according to the Association of Chartered Certified Accountants (ACCA).