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Providing a loan and receiving shares

Anyone heard of this?

Didn't find your answer?

A SATR client has just told me that he was given shares in his company. The bit that threw me is that he was told (by the company's accountants) that he needed to make a (repayable) loan to the company "for tax purposes". Loan has since been repaid so it was a genuine loan. 
 

I don't understand why the loan has to be made - does anyone else

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By Matrix
21st Jan 2020 21:52

Do you mean by his employer? And he didn’t pay for them?

No idea about the loan but would have thought there would be income tax under the ERS rules.

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By atleastisoundknowledgable...
22nd Jan 2020 10:39

Matrix wrote:

Do you mean by his employer? And he didn’t pay for them?

No idea about the loan but would have thought there would be income tax under the ERS rules.

Yes to both

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By chrisn
22nd Jan 2020 00:15

Did he receive the shares as a loan repayment instead of cash?

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By Tax Dragon
22nd Jan 2020 06:27

Have you seen the paperwork? C'mon, atlea, you're a seasoned awebber: give us something, anything, to point us in the right direction.

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By atleastisoundknowledgable...
22nd Jan 2020 08:43

Hey - you know me; I give everything I’ve got (at the time) ... was getting ahead of myself and jumped the gun before I had the facts. Apologies!

Paperwork came through during the night. The share award was an E’ee Share Incentive Scheme. IT due in the freebie award (paperwork states the MV for a date range before our award, but not for a range that includes it. Helpful.), still no idea of the loan’s relevance ... the thought I’ve had this morning is that it was purely to act as cash injection. Loan was repaid in cash on the sale of the company, which makes me think the loan point.

It’s a point for next year, but what’s the difference between a ‘share sale’ and an ‘equity release’?!

Thanks

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By paul.benny
22nd Jan 2020 07:40

Perhaps the company accountants could (with the approval of the company) explain the scheme to you. It would be a reasonable request.

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By atleastisoundknowledgable...
30th Jan 2020 13:04

Update today - The client was apparently told that the loan was to ‘alleviate the tax liability’ ...?

Anyone? HEEEEELLLLPPPP!!

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By atleastisoundknowledgable...
30th Jan 2020 21:50

On the off chance anyone’s bothered, client has come back to me this evening and announced that the guy who told it about the loan/tax relationship has ‘fessed up that it’s bollox. The loan was just a loan.

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