About a year ago I made aloan to a company I used to be a director of that is repayable at the end of the term in 2 years time. At the time i was not a high rate taxpayer, but since then have become so. My wife is a low rate tax payer. The comapny now wish to repay the interest acrrued and make quarterly interest payments. This will be pretty expensive for me. Is it possible to assign the loan to my wife so that the interest is taxed at her lower rate? Could that apply to all the accrued interest or woudl it only apply to future interest if possible at all?
Thanks for any advice
Mike
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Replies (5)
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Yes you can assign the loan, but the subsequent payment of interest up to the date of the assignment would still be yours.
Ask the solicitor dealing with the assignment whether they are prepared to backdate it to enable you to obtain a tax advantage, and let us know what they say.
What does the loan agreement say about unpaid interest? Does it provide separately for interest on unpaid instalments? This is is fairly common in loan agreements.
It is arguable that accrued but unpaid interest is assignable
The loan was set up to pay all interest at the end with interest compounding along the way. There is no wording about paying intermediate amounts.