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Where Taxpayers and Advisers Meet

personal tax relief on company loan

Herbs16
Posts:79
Joined:Wed Aug 06, 2008 3:53 pm
personal tax relief on company loan

Postby Herbs16 » Mon Apr 27, 2020 5:26 pm

Hi
I made a directors loan into my company, the company has been sold on without repayment of my loan therefore ive lost the money, can I claim personal tax relief on this
The company was started from scratch, I invested £100k into machinery and the business was sold for £25k basically as goodwill
Thanks

pawncob
Posts:4786
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: personal tax relief on company loan

Postby pawncob » Tue Apr 28, 2020 12:36 pm

https://www.taxationweb.co.uk/tax-articles/business-tax/tax-relief-for-loans-to-traders.html
With a pinch of salt take what I say, but don't exceed your RDA

bd6759
Posts:3611
Joined:Sat Feb 01, 2014 3:26 pm

Re: personal tax relief on company loan

Postby bd6759 » Tue Apr 28, 2020 2:41 pm

The company was sold? Does that mean you sold your shares? If that is the case the £25k was for your shares, not for goodwill.

Why do you think the loan has the loan become irrecoverable? You are a creditor in the accounts and the loan can be reclaimed.

samlarson
Posts:1
Joined:Mon Aug 03, 2020 3:00 pm

Re: personal tax relief on company loan

Postby samlarson » Thu Aug 06, 2020 11:37 am

Hi
I made a directors loan into my company, the company has been sold on without repayment of my loan therefore ive lost the money, can I claim personal tax relief on this
The company was started from scratch, I invested £100k into machinery and the business was sold for £25k basically as goodwill
Thanks
Nothing mandatory but get repayment terms agreed
Hi - nothing in law to require the loan to be repayed at any time ie it's just an unsecured debt of the company and, presuming there were no terms agreed when you lent it, it's up to you & the company to decide when it's repayable.

At the moment (pre-sale) it's all in your hands but afterwards, without agreeing anything you could be waiting forever.

If it were me I'd insist the loan was repaid on completion and if the company didn't have the funds then the new owner/director(s) should pay it & effectively just put themselves in the position you are in now.

If for whatever reason they do not have the ability to pay it off then you should get something agreed in writing, ie over what term & at what interest rate should the loan be repaid preferably with personal guarantees by the new owners/directors.
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