Beneficial Loan

Beneficial Loan

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Hello,

If a director's wife works for the company can they take a loan upto £5k in addition to any loan taken by their husband and not incur a charge on their P11D? The director is a shareholder but the wife is not (there are 2 other non related directors in the company, all with an interest greater than 5%). The wife is paid aound £25k for her work.

I have looked at the benficial loans in the EIM and cannot see anything stating that they cannot but just looking to double check in case I have missed anything. I understand for CT that both loans are treated independently.

Thanks

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By JCresswellTax
28th Feb 2012 09:01

Whose employment?

If the wife is getting the loan by reason of HER employment, then she can get the £5k tax-free.

If she is only getting it because her husband is a Director and no-one else in a similar position to her would get the loan, the loan is deemed to be by reason of HIS employment and would be chargeable on him.

The fact the wife is paid £25k suggests that she has a 'proper' job so is likely the loan would be by reason of her employment and she would, therefore, receive the £5k tax-free.

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Replying to Euan MacLennan:
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By HASXX
28th Feb 2012 11:10

Thanks

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By George Attazder
28th Feb 2012 16:26

Hang on...

... you said " I understand for CT that both loans are treated independently".  That's true for determining whether or not a particular loan has been repaid in connection with a S.455 charge, but in computing the initial S.455 charge itself, the two loans are aggregated, notwithstanding that the second loan may have arisen by reason of the wife's employment.

I've made the point in another post that S.455 is blind to the reasons a loan is made, and just looks at who a loan is made to; in this case the wife of a participator.

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