Loan write-off

A cash rich close company whose shareholding is owned solely by the husband employs the wife at a salary below the tax and National Insurance contributions rate. 

It is now proposed that the company should loan the wife a sum of money in excess of £5 000 which she will put on deposit in her sole name.

Prior to the company’s financial year end the company will waive the loan and this will be written off.

Presumably if the loan is written off and is therefore not outstanding at the company’s year end there will be no liability under TA 1988 s 419?

The written off amount will be grossed up at 100/90 and added to the wife’s other income which comprises salary from the company only and as her total income is below the higher rate threshold no further tax should then...