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Tax Relief on my Director's Loan??


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Hi fellow hubbers,

 

I'm currently reading 'Using a Property Company to Save Tax 17/18' and on page 195 it says:

 

Quote

The important point to note, therefore, is that, in most cases, an investor who borrows funds to invest in their own property company can claim tax relief for their interest against their other income.

 

What are the cases where this isn't possible? My understanding of this is that I've taken out a bank loan, which I've then invested into my company as a director's loan, I am able to claim the interest relief when completing my Self-Assessment Tax Return?

 

If this is the case, what boxes/parts of the SA Tax Return form would be completed to account for this??

 

Thanks for any help in advance!

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Based upon the limited information posted above:

 

Form SA100

Page TR3

Box 18

 

The interest figure can go there. Otherwise, you can charge your company the same interest or even higher-as long as reasonable-to reduce the company's profits (report this on CT61)-then declare your interest income from company-offset it against the interest paid out.

Most likely you would not pay any tax if the net figure of interest is < £1000 or £500 for basic and high rate tax payer respectively.

 

Feel free to ask any questions if this is not clear.

 

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  • 2 weeks later...

Hi Jordan,

From my reading of the book some years ago, I believe that the book reference is referring to the relief known as "HS340". Please see Self Assessment: additional information (SA101), Page 2 Box 5.

 

I believe from Debbie's response she is probably referring to the same section of SA101.

 

The following help sheet links may help but ultimately I would suggest you ask your accountant to confirm your situation. (Assuming as a ltd company owner this is something you either have already or will have by year end)

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690277/sa101-notes-2018.pdf
https://www.gov.uk/government/publications/interest-and-alternative-finance-payments-eligible-for-relief-on-qualifying-loans-and-alternative-finance-arrangements-hs340-self-assessment-helpshee/hs340-interest-and-alternative-finance-payments-eligible-for-relief-on-qualifying-loans-and-alternative-finance-arrangements-2018

 

Hope this helps.

 

Cheers

Dean

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