Loan to Ltd, from non-director family member
Discussion
I thought I'd ask the hive-mind before a chat with my accountant in the week, grateful for any pointers you can give me.
I have a Ltd company, and am the sole owner & director. The Ltd has a loan outstanding, secured by the EFG.
Wife has a reasonable lump of savings, currently earning approximately nothing in interest. The ltd is paying 3.89% on its loan, plus the EFG cost.
If wife lends money to the ltd, at around market rate of interest say 3%, are there any pitfalls to be aware of other than the risk of an overnight Bobbiting should the ltd fail and she lose her wedge?
I have a Ltd company, and am the sole owner & director. The Ltd has a loan outstanding, secured by the EFG.
Wife has a reasonable lump of savings, currently earning approximately nothing in interest. The ltd is paying 3.89% on its loan, plus the EFG cost.
If wife lends money to the ltd, at around market rate of interest say 3%, are there any pitfalls to be aware of other than the risk of an overnight Bobbiting should the ltd fail and she lose her wedge?
There is no law on a spouse lending money to her husband's company.
If the company is going to pay her interest on the loan, then the interest will become taxable income in her hands and she may need to complete a self assessment tax return in order for her to declare it properly for tax purposes.
If the loan is substantial, she may become a person of significant control in the company and, as result, even if she is not a director or a shareholder, may need to be notified to Companies House. This is a relatively new rule which came into effect earlier this years.
If the company is going to pay her interest on the loan, then the interest will become taxable income in her hands and she may need to complete a self assessment tax return in order for her to declare it properly for tax purposes.
If the loan is substantial, she may become a person of significant control in the company and, as result, even if she is not a director or a shareholder, may need to be notified to Companies House. This is a relatively new rule which came into effect earlier this years.
Eric Mc said:
Relative.
Relative to what? T/O, overall debt?...PSC:
-owns more than 25% of the company’s shares
-holds more than 25% of the company’s voting rights
-holds the right to appoint or remove the majority of directors
-has the right to, or actually exercises significant influence or control
-holds the right to exercise or actually exercises significant control over a trust or company that meets any of the other 4 conditions.
Edited by FWIW on Monday 17th October 11:27
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