Inter Company Loan Interest Question

Interest - Inter company loan

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Morning,

I have a limited company where A is the 100% shareholder.   This company wants to make a loan to another limited company owned by A's spouse.  

I think that 

a. it's acceptable for no interest to be charged on the loan and

b. that as long as the loan is used for a legitimate trading reason, and not for personal reasons, then there will be no directors loan tax charge for the spouse.

 

However, I need to be 100% sure of my facts and just now I am doubting myself as I haven't actually set up this type of loan before.

Please could someone direct me to the relevant HMRC rules so that I can double check and be sure.

Thank you.

Replies (7)

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By Ruddles
11th Apr 2024 11:33

You may need to carefully consider the accounting (and thus tax) treatment of an interest-free loan). This forum should not be considered a substitute for investing in, and reading/attending, the appropriate reference resources.

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Replying to Ruddles:
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By FactChecker
11th Apr 2024 13:36

A new slogan ... I like it.

Here's a thought:
IF it, or something very like it, was automatically printed by the Sift software *immediately at the bottom of each new question posted* (preferably in bold and inside a frame) ... then we wouldn't have to waste time:
- pointing out to new members that they should have read the conditions;
- adding caveats to any responses we send;
- calming those who then object to those caveats ... and so on.

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Replying to Ruddles:
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By paulwakefield1
12th Apr 2024 09:22

Which is probably why the OP asked for a direction to those resources? They did not ask the forum for answers to the underlying question.

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By Cylhia66
12th Apr 2024 07:08

If one company is owned by A and the other company is owned by A's spouse, is there really an intercompany relationship?

Definition of an intercompany in the UK: In the UK, "intercompany" typically refers to transactions or relationships between different companies within the same corporate group. This could include financial transactions, transfer of goods or services, or other business dealings between separate entities that are part of the same larger organisation.

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Replying to Cylhia66:
By Ruddles
12th Apr 2024 08:35

Cylhia66 wrote:
If one company is owned by A and the other company is owned by A's spouse, is there really an intercompany relationship?

You have 2 companies. Whether owned by different persons or the same person I’m struggling to find a better way to describe a transaction between the two. The “definition” that you’ve found is hardly an exhaustive one.
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Replying to Ruddles:
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By Cylhia66
12th Apr 2024 09:19

I see what you mean. Happy to stand corrected. I thought there needed to be more to that to use the term intercompany.

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