loans

[lilelvis2000]

I have read that a loan from my company to myself should not be more than £5,000. but what about to a friend...who is desperatly in need of cash? What are the rules on that? I can't seem to find anything specific.

Sal.

[tim123]

The rules only apply to loans to directors.

But do you really want to make such a large loan to a friend from your company?

tim

[lilelvis2000]

If it saves his home? I've no choice really...

I will earn a small bit of interest on it.

Sal.

[tim123]

You have to ask yourself, "if no-one else will lend this person the money, why should I?"

I can see that a few hundred or maybe even a grand or two might be the sort of money you would be willing to lend, but if someone is desparately in need of 10 grand (or more) why is one of those nice high street companies not prepared to lend it?

I see a high risk of the loan going bad here and if you have loaned it from the company the revenue are not going to let you write it off easily. You are not a bank, they don't expect you to take such a risk.

tim

[lilelvis2000]

So basically I should let him go under?

with friends like that, who needs enemies?

[partimer]

Many contractors make the mistake that the money in your company business account is your personal slush fund. It's not. There are many "proper" ways to get money out e.g. dividends, salary, etc.

You're going to have to get a director's loan. Then you could potentially loan your pal that money. However I totally agree with Tim. The IR will take a very dim view of it, not to mention the horrendous tax implications (you're trying to make a profit out of it).

Agreeing with Tim that you're not there to act like a bank. Think of it another way, we could all then be loaning money to ourselves and then loaning it out to somebody on the street, who could then put it on a horse at Haydock. We could then all try writing it off as bad debt.

This just won't wash with the IR. Otherwise why not get a director's loan and buy stocks and shares and write off the mistakes ... No, it just doesn't work that way.

[zeitghost]

I think what they're saying is that YOU should lend him the money, not your company.

I did that for a mate about 8 years ago.

Received final repayment last August.

[lilelvis2000]

probably the way to go - even if it mean paying a bit of personal tax (sigh). I suppose a large dividend and a bonus will take care of it.

I just wanted to know if there was any legal reason against loaning employees or outsiders money.

If it helps my pal - I'll do anything. I've only given him a year to pay me back...any bets on that?

Salik.

[mailmannz]

Get your friend to put the house in your name until the money is paid back :rollin

Mailman

[zeitghost]

"Get your friend to put the house in your name until the money is paid back"

Good idea.

Then YOU can evict him.