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Where Taxpayers and Advisers Meet

Sale of company with overdrawn directors loan

chr004
Posts: 1
Joined: Thu Aug 09, 2018 2:44 pm

Sale of company with overdrawn directors loan

Postby chr004 » Thu Aug 09, 2018 2:52 pm

Director has significant overdrawn loan account.

Looking to sell company for £x and pay CGT on that at 10%.

Purchaser will retain sufficient funds to clear overdrawn loan account and will pay net amount to vendor.

Does this work from a tax perspective i.e. can the director clear an overdrawn loan account (which would normally be cleared by voting a dividend/bonus chargeable to income tax) with proceeds from selling the shares which is subject to much lower cgt rates.

pawncob
Posts: 4104
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Sale of company with overdrawn directors loan

Postby pawncob » Sun Aug 12, 2018 6:54 pm

Source of funds is irrelevant. Loan repayable on sale.
With a pinch of salt take what I say, but don't exceed your RDA

wamstax
Posts: 1825
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Sale of company with overdrawn directors loan

Postby wamstax » Sun Aug 12, 2018 9:12 pm

Overdrawn loan account increases worth of company so you are chargeable on the gross sale price of the shares NOT the net proceeds received
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website


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