Originally posted by Jessica@WhiteFieldTax
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Reply to: LtdCo lending secured on property
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Previously on "LtdCo lending secured on property"
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Originally posted by northernladuk View PostOh bugger, will delete my comment then as it appears it is utterly wrong... Just have to wait for someone to post about lending it to a friend not related to the business and resurrect it...
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Originally posted by Jessica@WhiteFieldTax View PostTechnically S455 is about loans to shareholders rather than directors anyway. So, makes no difference.
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Originally posted by eek View PostI'm not trying to be awkward here but what about leading it to a shareholder that is not a director?
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Originally posted by eek View PostI'm not trying to be awkward here but what about leading it to a shareholder that is not a director?
It comes under the umbrella heading of Close companies: loans to participators or their associates so that catches you, your spouse, your kids, your parents, your dog etc under pretty much the same rules as far as I can tell. Their definition of a participator is defined doesn't actually define what an associate is as far as I can see.
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I'm not trying to be awkward here but what about leading it to a shareholder that is not a director?
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Originally posted by professor View Postthe company could give a secured loan to anybody, does it still get classified as a 'director's loan'?
Originally posted by professor View Post...and that leads to another question why would HMRC keep 25% without interest for the duration of the loan ?
It may still be worth doing though. If you had (say) £125k retained in your company, you could borrow £100k and then put aside £25k for the S455 charge. I think they may even refund the S455 charge with interest so you should check this. Definitely get professional advice before proceeding with this one.
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"Yes, it's possible, subject to the S455 and BIK issues"
Thank you for the responses. As this is clearly a secured investment, and the company could give such a secured loan to anybody, does it still get classified as a 'director's loan'?...and that leads to another question why would HMRC keep 25% without interest for the duration of the loan ?
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[QUOTE=Wanderer;1689362]I don't know if it's ever happened but I've read that without shareholder approval HMRC could seek to challenge the loan saying it was a dividend, or worse still, salary.[QUOTE]
Urban myth: I've never seem HMRC take the point.
Originally posted by Wanderer View PostThere's some ideas, it's probably time to get some professional advice now.
Yes, it's possible, subject to the S455 and BIK issues, so long as someone goes into it with their eyes open.
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Originally posted by northernladuk View Posta charge of 25% of the loan amount is payable, often called the S455 charge
Also, if your director's loan is over £10,000 then it needs approval from the shareholders. This should be as simple as having a board meeting and pass a resolution that the director can take a loan of £x amount, writing up the meeting minutes and file them away somewhere safe. I don't know if it's ever happened but I've read that without shareholder approval HMRC could seek to challenge the loan saying it was a dividend, or worse still, salary.
If you have a lot of money retained in the company then you may be able to do a Members Voluntary Liquidation. I'm sure there are lots of places that do these if you google it, but Maslins seems to have taken a lead on providing a low cost option £995+VAT "plus disbursements for advertising and bonding".
There's some ideas, it's probably time to get some professional advice now.
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You don't want any property in the company name, it isn't worth doing for a host of reasons.
Keep the company money and your personal investments separate.
Use the search I linked above to look for BTL and LTD as well. That has been covered numerous times also.
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You are forgetting S455 of the Corporation Tax Act 2010...
The catch is that if the loan is outstanding 9 months and 1 day after the company year end, then a charge of 25% of the loan amount is payable, often called the S455 charge. This charge is refundable once the loan is repaid, but this doesn't happen immediately on repayment of the loan so it represents a major stumbling block and it was deliberately designed to prevent directors taking long term loans.
Ripped from Wanderers post here..
http://forums.contractoruk.com/accou...an-my-ltd.html
Many other threads on this here
LTD Loan site:forums.contractoruk.com/accounting-legal - Google Search
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LtdCo lending secured on property
Can the LtdCo lend money long term, with interest charged say 4%, with the director's second property mortgaged to the LtdCo ?Tags: None
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