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2020/2021 inter-company loan interest rate?

What interest rate to set for a loan between limited companies with same director?

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Does anyone know what interest rate to use for a loan between UK limited companies with the same director, for HMRC not to consider it a below-market interest rate for a related party loan in 2020/2021?

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Psycho
By Wilson Philips
19th Apr 2021 22:50

What is your particular concern?

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By bookbee
19th Apr 2021 23:26

Since the two limited companies are both single-director companies owned by the same director, wouldn't a loan between the companies below market rate be considered a beneficial loan or attract some concern from HMRC?

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Replying to bookbee:
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By Calculatorboy
19th Apr 2021 23:57

So where is your authority for that ? I've never heard of it.

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Replying to bookbee:
By johngroganjga
20th Apr 2021 05:41

HMRC are certainly concerned about beneficial loans made by companies to their employees, and indeed specify an interest rate below which they are beneficial, But why do you think they are concerned about loans companies make to other companies?

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Replying to bookbee:
Psycho
By Wilson Philips
20th Apr 2021 09:49

Are the companies large?

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By SteveHa
20th Apr 2021 09:48

Are the companies grouped?

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By GR
20th Apr 2021 10:28

I think the poster is confusing director's loans and inter-company loans?

Or maybe worried about accounting standards and interest free loans?

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By Tax Dragon
20th Apr 2021 10:33

.Anon wrote:

Does anyone know what interest rate to use for a loan between UK limited companies with the same director, for HMRC not to consider it a below-market interest rate for a related party loan in 2020/2021?

Market rate or above should do it. (But beware paying too far above.)

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By bookbee
20th Apr 2021 14:31

So there's no implications for a loan between two limited companies with the same single director, other than declaring it as a Related Party Transaction?

Other threads on this forum seemed to suggest that HMRC would scrutinise a zero-interest or below-market interest rate loan between companies sharing a single director, or there may be tax implications? Is this wrong?

(FYI: The companies are both micro entities. The companies are not grouped. One company is a supplier to the other.)

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Replying to bookbee:
By Ruddles
20th Apr 2021 14:55

Can you direct us to one or more of those threads in question. I suspect I know which ones you are referring to but if I'm right interest rates are irrelevant.

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Replying to bookbee:
Psycho
By Wilson Philips
20th Apr 2021 14:56

Quote:

So there's no implications for a loan between two limited companies with the same single director, other than declaring it as a Related Party Transaction?


Only if, as you say, the companies are not large.
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