Commercial Loans

[WTFH]

This is what am asking about, how would a business to business loans work if lender is Ltd and the other is not? What are the regulations and terms around it?? I am trying to find out ANY info about business to business loans.

OK, so we are asking you how is your other business set up?

It's like you don't want to tell us, or is it a case that you haven't set it up yet?

If you want help, you need to give us the information!

[SandyD]

OK, so we are asking you how is your other business set up?

It's like you don't want to tell us, or is it a case that you haven't set it up yet?

If you want help, you need to give us the information!

Both... and it doesn't matter how I did or will setup my business, its immaterial to the question.... the question is do YOU know the regs around business to business loans? Clearly you don't know, and you can't help, you just want to know the details of my business which I am not going to answer.

There are a lot of links on the HMRC for director's loan, which is a loan from the business to the director for personal usage e.g to buy their own property or car etc...

but I couldn't find anything regarding if a loan from a ltd to a business (lets say a shop selling goods, or online store or maintenance services, or translation / editorial business, a travel agency business) ANY business that is NOT setup as a ltd.

Is the business to business loans definition and conditions that it has to be from one ltd to another ltd, or can it be from ltd to sole trader or other setup??

I can't find guidance on this matter.

[WTFH]

Both... and it doesn't matter how I did or will setup my business, its immaterial to the question.... the question is do YOU know the regs around business to business loans? Clearly you don't know, and you can't help, you just want to know the details of my business which I am not going to answer.

OK, if you lend LTD to LTD, then it's a business loan.

If you lend LTD to a "something else I refuse to tell you about" then it's a director's loan. Until you can tell us what the "something else" is, then the only answer you'll get here is: It's a director's loan.
As yet you've not provided any information to point to it being anything other than a director's loan.

[northernladuk]

Lol what a car crash this is.

[WordIsBond]

Mate, you've got your answer, you just didn't notice.

My Ltd lending money to my other business (but other business is not Ltd so not company to company lending)

That’s a loan to you (assuming you’re a sole trader). So that’s going to fall under directors loans rules I’d say.

As far as HMRC is concerned, your other business is YOU. Unless it is a partnership, in which case if you want any answers you really need to either get specific about what you want to do, or just pay an accountant for advice.

If your other business is YOU, and as far as HMRC is concerned it is, then the rules about directors loans are determinative.

[SandyD]

Mate, you've got your answer, you just didn't notice.





As far as HMRC is concerned, your other business is YOU. Unless it is a partnership, in which case if you want any answers you really need to either get specific about what you want to do, or just pay an accountant for advice.

If your other business is YOU, and as far as HMRC is concerned it is, then the rules about directors loans are determinative.

Thanks, where are the links or facts you guys quoting regarding business loan to partnership or sole traders? I didn't see any on the HMRC site about business loans to partnership or sole traders?


I can't be specific yet as I haven't set it up yet, am asking about information so I can set it up correctly, but want to avoid another Ltd.

[vwdan]

Why not just title this "How can I shunt cash out of my Ltd Co to use for something else without incurring tax"?

[WordIsBond]

Sigh. If you are a sole trader, it is you as a person. https://www.gov.uk/set-up-sole-trader.
"you run your own business as an individual"

That means to them, your business is you as an individual. And you as an individual are also a director of your limited company. So you can't loan to a sole trader business as a business, because that business doesn't really exist as a tax entity. Its net income (income minus expenses) are all taxed as your income. And its loans are treated as your personal loans, which make it a directors loan.

If you can't follow the logic of this, then you really shouldn't be making decisions on it without first paying a professional for advice whose advice you follow to the letter.

I'm not an accountant and I've never been involved with a partnership, so I don't know how the rules are different, or if they are. I'm guessing (wildly) that a loan to a partnership would be considered partly a directors loan and partly loans to the other partners, pro rata, based on the percentage ownership of the partnership. But I don't know, and I really don't think you want to start messing around with partnership structures with as much difficulty as you are having grasping the concepts discussed above.

Why not have the new business be part of your existing Ltd? Why don't you want it to be a limited company? Either of those will solve this. So will just taking a directors loan.

[Alan @ BroomeAffinity]

A partnership loan is the same as a sole trader loan. Ie, it’s a directors loan subject to the director loan rules. I’m not providing any links but here’s a thing: google does that sort of thing for you.

[SandyD]

I googled and didn't find anything regarding rules from Ltd business to non Ltd business.

Funnily enough on one of the taxation / accounting forum I saw questions about a sole trader business loaning money to another sole trade business, they said such loan is a balance sheet entry, first business bank balance would be reduced but the debtors would increased. This transaction does not go into the profit and loss account.
- it is not an expense for the lender to lend other business money and
- it is not income for the other business to receive a money loan

But it seems no one knows about the Ltd to non ltd business scenarios