£50K Interest Free Loan for 12 Months

[PerfectStorm]

In terms of banks actually suppling this (as you have to go to one to get the money, not the government) am only aware of Barclays so far... no one else appears to be showing their hand publicly. It was similar to this when the Help to Buy ISAs launched and bank staff/contractors had to actually work to implement a change, and quickly - both things they don't like to do!

Bounce Back Loan scheme | Business Banking | Barclays

[ladymuck]

Looks like it's going to fixed at 2.5% interest (we all know a cap means they will charge up to that limit) and normal affordability checks not required

Interest on UK coronavirus bounce-back loans to be capped at 2.5% | World news | The Guardian

[northernladuk]

Whether there will be any follow-up on that and the likelihood of getting caught is too early to tell. But I suspect anyone caught taking inappropriate advantage of coronavirus assistance packages is going to be treated by the courts (and the press) as the lowest of the scum of the earth.

This is my fear. Although it's slightly different being a loan there is always someone that has abused every hand out situation. I keep thinking about Greenfell but it's so much to so few it's easy to name and shame. Not so sure this will be the same. It will certainly be something for the gutter papers to go at for shock titles later though. Won't take much for a journalist to have a poke around and come up with some shock and awe headlines.

I'm thinking it's more likely going to be people that take the loan with no intention of paying it back. Claiming the company is bankrupt and keeping the money with no come back on the directors or something daft, not people using it for some interest and paying it back.

[northernladuk]

In terms of where to put the money - I can't find better than Redwood 1.55% with a 95 day notice. So if the loan matured on May 4 2021, you'd serve notice in late January (for example)

95 Day Business Savings Account (Issue 6) | Redwood Bank

This would bag about £780 interest - subject to corporation tax. Not bad for a few clicks.

Any better accounts out there?

That's a very good rate considering there are mortgages at not far off that. Aldermore used to be the go to people but at a very quick glance they seem to be 1.05%. There is 1.1% for one year but if you are slow to withdraw it the interest on the 50k might out do any savings so the flexibility on yours is also very good.

[PerfectStorm]

In terms of where to put the money - I can't find better than Redwood 1.55% with a 95 day notice. So if the loan matured on May 4 2021, you'd serve notice in late January (for example)

95 Day Business Savings Account (Issue 6) | Redwood Bank

This would bag about £780 interest - subject to corporation tax. Not bad for a few clicks.

Any better accounts out there?

[WordIsBond]

It's only for coronavirus-affected businesses. If you use it and that doesn't describe you, there's the ethical/moral ramifications but also probably legal problems -- it's in the fine print somewhere, certainly.

Whether there will be any follow-up on that and the likelihood of getting caught is too early to tell. But I suspect anyone caught taking inappropriate advantage of coronavirus assistance packages is going to be treated by the courts (and the press) as the lowest of the scum of the earth.

As to using a director's loan for purposes of an offset mortgage, you have to pay your Ltd interest at 2.25% for amounts over £10K, which will then be subject to corporation tax, and to personal tax when extracted from your company. So, it would be a savings, no doubt, but not quite as good as described earlier in the thread.

[ladymuck]

How would you suggest he goes about furloughing himself as he’s obviously eligible for it?

They can furlough themselves without approval from HMRC, as long as they can justify it if asked. The fact they consulted their accountant and HMRC and have a response in the negative will just make the job of justfication harder if there is any investigation into their use of the scheme. Having evidence of multiple attempts to get the 'right' answer is unlikely to help.

My comments are mere speculation as this is very new but I expect there will be a heck of a lot of fraudulent claims. HMRC have three options: come down hard and over time validate every claim; cherry pick claims to look closer at like they do with every other tax investigation; or write the whole lot off and recommend hikes in all forms of tax to recoup the spend with strong enforcement.

[jamed]

I think asking multiple questions and changing the detail you give until you get the answer you want to hear isn't really the right approach.

How would you suggest he goes about furloughing himself as he’s obviously eligible for it?

[ladymuck]

Ah I see. I'd personally log back on and submit another query and maybe add some more info such as your ltd is currently making a loss due to CV as you are not able to find work.

Technically every UK company is able to furlough staff irrespective if they still have income coming in or not. The fact is you are negatively impacted by CV as you cannot find a new role.

I really think you just got a dud reply from someone who was roped in last minute to deal with the high volumes in HMRC and doesn't have a clue what they are talking about.

I think asking multiple questions and changing the detail you give until you get the answer you want to hear isn't really the right approach.

[northernladuk]

He's more complicated than just a company and this type of legislation rarely handles complexity well.