A company who has a sole director & shareholder is considering lending £100k to the directors wife. The loan will be SUBJECT to 5% annual interest. The directors wife is not a shareholder/director/employee. Is the loan subject to S419 (25% Corporation Tax).
Does the interest element waive the S419 treatment?
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no
It isn't 419 any more......The S455 implications of the loan are not affected by interest charged or not charged as the case may be.
But commercial int. will avoid the personal BIK
As director shareholder, the loan arrangement will also be potentially within the employee beneficial loans legislation, but if interest at or above the Official Rate is paid, there will be no chargeable benefit.