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Readers’ forum: Losses on loans in an estate

16 January 2023
Issue: 4872 / Categories: Forum & Feedback
Director’s loan

We have been asked to look at a tax issue relating to a deceased’s estate whereby the first spouse (our client’s father) died intestate in 2016 and the assets of his estate included a claim for a director’s loan balance of £410 000.

A deed of variation was made by the six children within two years of the date of death under which all of the assets were left to their mother.

The mother also died intestate in 2019 and the claim for the director’s loan balance was still unresolved at this time; accordingly the claim for this amount passed to the personal representative of mother’s estate.

In 2020 a distribution in respect of the director’s loan balance was made from the liquidation of the husband’s company in the sum of £140 000. Ordinarily a capital loss in the sum of £270 000 has been crystalised...

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