Company Loan

Company Loan

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A company lent a 3rd party £3500 in 3 monthly installments. On the 4th month, which happened to be the year-end, the full amount was repaid. No interest was charged to the individual so in effect this was a short-term interest free loan. The money was not loaned to a director nor an employee of the company

1) Is this allowable.

2) Would it be allowable if interest was charged-if so at what rate?

3) If yes to 2) do the accounts need to be altered to allow for the interest accrued to when the loan was repaid or would it be ok just to include the interest on the first day of the next year.

Red_42

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By AnonymousUser
27th Feb 2007 14:42

seems a bit odd
You say The money was not loaned to a director nor an employee of the company. Why did the company lend money to an unconnected stranger?

If it did so then there is no more to be said. No interest was paid or charged and no balance was outstanding at the balance sheet date.

If it was a loan to a member of a director's family then it was by reason of the direcotr's employment and is really a benefit on him so this would need to be disclosed on his P11D, except that it is below the reporting threshold (£5,000). You will however need to check that the director did not have other loans from the company that took his aggregate indebtedness above the £5,000 de minimis at any time.

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By munish1000
20th Jun 2007 14:28

Same Question
Is it possible, If company lending to 3rd party say 100k, to earn more interest than bank deposit account. Any restrictions on lending or any regulations on interest rate?

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