Loan Interest received

[Bowen80]

Hi,

A company I work for has lent two other business some cash to help them short term. We are charging them interest at an agreed % above base rate.

Am I correct I assuming that the loan itself is outside the scope for VAT purposes and the loan interest received would be exempt?

Others have mentioned an issue with Partial Exemption but I cannot see how this would create an issue as there are no costs incurred in the business that are related to this exempt activity as it is merely interest on a loan.

Thanks for your help.

[pawncob]

Assuming the interest is incidental to the main business purpose, you can probably ignore it for VAT.
https://www.fuller-spurling.co.uk/news-articles/articles/vat-on-interest-income/