I know you can borrow from an offset mortgage and invest in EIS and still qualify for Qualifying Loan Interest. However, a client is asking me this;
We need to inject £30k into the company, £6k will have to be share capital (that's the minimum share capital for £30k injection) and the remaining £24k as a loan to the company. I know you can borrow personally and use the funds in a company. We borrowed £182k from Santander in January 2018 as part of our mortgage and although the funds were directed to the house purchase (as a mortgage does) we have always seen this as borrowing that we would eventually use for the new company, i.e. we deliberately borrowed instead of using our £30k cash reserve in order to finance the company. Do you think this qualifies given that it isn't a direct borrowing.
Thanks
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The answer to your client's question should include the phrases "you moron" AND "why the fuhc didn't you ask BEFORE you did this".
The money borrowed needs to be USED (directly) for the purpose for which it is borrowed to qualify for relief under s 383.
I can think of one viable alternative which is to take out a personal loan specifically for this, rates are competitive at 2.9% vs business loans of double digit. However, in order to get the rate you've got to use the funds to go on holiday/consolidate or buy a car. Anything else i would imagine the rate increasing. How would one get round this? Thanks
“in order to get the rate you've got to use the funds to go on holiday/consolidate or buy a car.“
Well that’s not borrowing directly for the business purpose, is it?
It’ll only claw some back, but why don’t the (I presume) H + W each loan £12k & charge interest to the company. They won’t be able to deduct the mortgage interest paid, but if you get the figures right based on their other income, they’ll (potentially) pay no/little personal tax whilst getting CT relief.
Thank you, so under the personal savings allowance of £1k given they are both BRT. So it could be done as £12k loan each with say 5% interest only over 10 year period = £600 interest pay year.