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We have a client who is a director and 10% shareholder in a trading subsidiary. The holding company has offered to sell him an additional 20% of the subsidiary shares at their current market value.
Our client cannot immediately afford to pay for the shares so Holdco has offered to provide him with a loan. My understanding is that a director’s loan under CTA 2010 s 455 tax will be paid by Holdco and our client will pay interest to the company on the loan at HMRC’s authorised rate.
Fortunately the subsidiary is growing and increasing in value and the plan is to sell it in three to five years. Our client will then pay off the loan with the sale proceeds.
One concern is if the sale does not take place. Our client would not then be in a position to repay the loan....
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
