Early exit fee

Early exit fee

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Hi all,

I have a company in which an individual made a loan to the company.  There will be charges of interest along the years and an early repayment fee.  Would the early repayment fee be treated as a trade expense (and categorised appropriately by looking at what the loan was for) or a capital tax?

Thanks,

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By 0305204M
15th May 2012 12:32

Sorry I realised that I may not have explained myself properly above.  I know that in the trade it will be treated either as an add back or an incidental cost of raising finance dependant on the terms of the loan.  My question is from the individual side.  Is he taxed on the repayment fee as a capital gains tax or as general income tax at the appropriate rate? I can't seem to find anything in the legislation to answer this.

 

Any help would be greatly appreciated.

 

Thanks

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By thisistibi
15th May 2012 12:45

Edit

Sorry - did not see your clarification before I posted.  I don't know the answer for the individual.

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By 0305204M
15th May 2012 12:41

Thanks thisistibi I agree with your response.  However it is from the individual side that I would appreciate any input as I am not sure of how the exit fee would be treated in the self assessment tax return of the individual.

 

 

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