Loan to company - written off?
I have a client company with 1 sole director and his partner (not married) has loaned the company £60k.
They want to get the debt out of the company so have decided to write off the £60k loan to the company.
My question is - will corporation tax be charged on this £60k as i assume she will be entitled to a capital loss?
Thanks
seems like it might be better to capitalise
otherwise it could be taxable in hands of company
.
Hi Terry,
I may be wrong but I would like to question your comment below.
"Were it the director who was owed the money, the release shoud be non-taxable to the company"
I was under the impression that for the loan relationship to be tax neutral (or not subject to tax) under the loan relationship rules the debtor and creditor relationship had to be between corporates.
Any write off by the director in the above case would therefore have a tax effect, no?
Again, happy to stand corrected on this one if you are correct.
Regards
Need to know more
Why do they want to get the debt out of the company? Can the company genuinely not pay it back (now or later)?
It's not possible to give a reliable answer to the question without more background information.