Equity release

Our client is in his early 80s and is the principal director and shareholder of a company that has been trading for many years.

For the past three years business has been difficult and our client has had relentless pressure to reduce company bank-borrowing by selling freehold sites or introducing personal monies.

Entering into an equity-release arrangement enabled our client to inject £500 000 into the company and pay off the bank in full.

It is calculated that this will provide annual savings in charges and interest of at least £60 000.

From a tax angle I have been asked to advise whether the company would get tax relief on the legal and professional charges involved with the equity release which amounted to approximately £2 500 and also as to whether our client could obtain tax relief on the interest that he is effectively paying on...