Directors Loan

[mudskipper]

Are you also a director? Why don't you take out the loan instead of your father?

[mudbath]

I have looked up what a troll is and unfortunately am not one

Just wanted some answers to a serious question! Thanks for the replies and info, I will just speak to a financial advisor from now on.

[cojak]

If he is paying HMRC interest of 4% then BIK does not apply, or does it?
Also he will be living with me and paying me market rent, so wont be a gift with reservation? or have i got that wrong.
We will be doing a members voluntary liquidation.
Not sure what a troll post is, but dont think im one ????

I don't believe you, everyone who has ever posted on a forum knows what a troll is.

Or are you jnz in disguise? I think you are...

[ASB]

Also he will be living with me and paying me market rent, so wont be a gift with reservation?

He is borrowing 400k. He is giving you X in one way or another. I used the wrong terminology. It is a potentially exempt transfer. Counts towards his estate for 7 years (sliding scale of chargeability).

But you are right, it shouldn't be a gift with reservation if he is paying market rent for any enjoyment he gets out of it. If it is a GWR (and HMRC might try and argue) then it stays in his estate until death.

Lifetime transfers: introduction to gifts with reservation of benefit

[mudbath]

If he is paying HMRC interest of 4% then BIK does not apply, or does it?
Also he will be living with me and paying me market rent, so wont be a gift with reservation? or have i got that wrong.
We will be doing a members voluntary liquidation.
Not sure what a troll post is, but dont think im one ????

[ASB]

There are also IHT implications in the event of his death. The situation described is, in effect, a gift of 400k from the father to the son.

This will be a gift with reservation and will still be part of the estate on his death for 7 years.

[northernladuk]

I can't help but think this is a troll post....

ESC16 doesn't exist anymore. You have to liquidate your company.

You are really borrowing £400k from the company to be paid back in max 21 months? I think you have your sub 5k directors loan mixed up with a loan from the company which carries BIK and other complications.

Looking at the amount as well.... still think this is a troll post.

[Clare@InTouch]

If he dies, it would be a debt of his estate, so it would be repaid as part of probate/liquidation. If it's him that owes the company and not you, then I'm not sure how your house would be at risk. Your accountant would be the best one to talk to, because it depends on how the loan has been set up (is there any security against it for example?)

Don't forget that whilst repaying it will remove any additional Corporation Tax charge, it will still be a benefit in kind so there will still be some tax to pay.

[mudbath]

Thanks