Pike – English Court of Appeal rearticulates the three tests of what is “interest”

Before concluding that a loan premium was interest on general principles, the Court of Appeal of England and Wales adopted the following statement of the characteristics of interest: "First, it is calculated by reference to an underlying debt.  Second, it is a payment made according to time, by way of compensation for the use of money.  Third, the sum payable accrues from day to day or at other periodic intervals" (but, as was the case here, can all be paid at maturity and is not "denatured" as interest because it is paid in one lump sum along with the principal).

Neal Armstrong.  Summary of Pike v. Revenue and Customs Commissioners, [2014] BTC 33, [2014] EWCA Civ 824 under s. 12(1)(c).