quick question re loans

[ratewhore]

Hi all you intelligent people (and ATW, if you ever visit the accounting forum),

What are the rules concerning non-director loans TO the company? Particularly in terms of payback and interest etc.

Ta...

[tim123]

What do you mean?

You can loan your company as much money as you like.

You can require whatever payment terms you like, but don't expect to be able to enforce them in preference to other creditors.

Any interest paid to you as the lender is taxable as income.

tim

[Sockpuppet]

Agreed. I loaned my company £3000 to get started and to buy all the equip / courses I needed.

Accountant say as long as its recorded in the books I can take the money back again as quickly as I like.

[expat]

Hi all you intelligent people (and ATW, if you ever visit the accounting forum),

What are the rules concerning non-director loans TO the company? Particularly in terms of payback and interest etc.

Ta...

I don't know the answer but at least I get the question. You want your GF to lend money to the Co and get paid a whopping interest rate on it....?

[ratewhore]

I don't know the answer but at least I get the question. You want your GF to lend money to the Co and get paid a whopping interest rate on it....?

Sort of right but the whopping interest rate is not the issue. There is a valid reason as to why I want her to make a loan to the company and I was looking at a rate of return of say 12.5-15% over the year. I just wanted to double check there were no issues I was missing.

Thanks for all the replies...

[tim123]

I suppose that there is the possibility that if you pay an interest rate that is not commercially sensible, it will be disallowed as a deduction for CT.

But as long as the recipient (of the interest) is declaring it on their tax return I don't think Hector loses out.

tim

[boredsenseless]

I suppose that there is the possibility that if you pay an interest rate that is not commercially sensible, it will be disallowed as a deduction for CT.

But as long as the recipient (of the interest) is declaring it on their tax return I don't think Hector loses out.

tim

I'd check this out as it may be considered a closed financial transaction and therefore disallowable and possibly even fraudulent.

[Sockpuppet]

I'd check this out as it may be considered a closed financial transaction and therefore disallowable and possibly even fraudulent.

Not to mention large transfers to and from accounts in quick succession (i.e. less than a year) the bank will report you and flag your account as a suspected money launderer.

[Nixon Williams]

Sort of right but the whopping interest rate is not the issue. There is a valid reason as to why I want her to make a loan to the company and I was looking at a rate of return of say 12.5-15% over the year. I just wanted to double check there were no issues I was missing.

Thanks for all the replies...

Such a high interest rate does not appear to be at normal commercial terms, you do not mention what the valid reason is but if the interest rate was say 2% above base I cannot see any problems.

Alan

[tim123]

Such a high interest rate does not appear to be at normal commercial terms, you do not mention what the valid reason is but if the interest rate was say 2% above base I cannot see any problems.

Alan

I'd love to know which bank will give 'myco' a loan at 2% over with no personal guarantee and no collateral.

tim