New queries, issue 4558

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Can tax relief be obtained on a loan to a company and interest received tax free?

I have been giving some thought to the implications of the exemption for interest received and wonder whether there is an opportunity here for my clients who are trading through limited companies. In the past I have had one or two such clients that have loaned money to their company which has in turn paid interest back to the director/shareholder. Presumably in future the company can still do this and obtain tax relief for the payment while the lender will receive at least part of this tax free.

This got me thinking. I am assuming that the lender has a risk that if the company gets into difficulties there is a chance that the money lent will not be repaid. Further they do not have the...