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PENNY BATES considers how to maximise tax relief on loans to companies and to purchase shares
KEY POINTS
- The defining conditions.
- Income tax relief on interest paid.
- Capital repayments and cash extraction.
- What if the loan is irrecoverable?
- Share purchase and loan conversion.
In my article Crunch time I looked at the tax implications of a director borrowing funds from his small company. Let's now turn to the opposite scenario of a director lending monies to his company.
As with the previous article the loaning of monies by directors to their company is a very common situation and it is important to understand the tax implications of making such loans and what happens if the worst should happen and the business folds.
Income tax
Directors often inject funds into their companies either directly as a loan or by a purchase of share capital. This article will look...
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