Q. I borrowed some money from my company to lend to my brother. He is
paying it back in monthly instalments over three years. I am the sole director
and shareholder of the company and I am not charging my brother interest on the
loan. Are there any tax implications I need to consider?
A. The tax implications for the company are that the loan is deemed to
have been made to an associate of a participator in the company, and as such,
it will be caught by what are commonly referred to as the ‘section 455 rules’.
Broadly, these rules mean that the company will have to pay tax at 32.5% on the
amount of the loan outstanding nine months after the accounting year end of the
company. When the loan has subsequently been repaid to the company, HMRC will
refund the tax paid.
There is an exception to this, namely where a loan does not exceed £15,000, but
only when the shareholder does not own more than 5% of the shares.
If an employee of a relative of an employee receives an interest-free loan from
an employer, this will be a benefit-in-kind for the employee. Interest at the
‘official rate’ (currently 2.5%) is calculated, and this deemed interest is
subject to tax. However, there are exceptions to this tax charge where:
– the loan is a ‘qualifying loan’;
– a qualifying or non-qualifying loan is less than £10,000; and
– the employee can show that they received no benefit from the loan to the
recent years the number of ‘online traders’ or ‘Ecommerce’ businesses has grown
considerably and in the next ten years we believe the market will at least double!
& Co began advised several substantial eBay traders over ten years ago and due
to the significant growth of Amazon FBA (and many other markets) we have been very
fortunate to have attracted a significant number of these businesses as clients
from across the UK (and overseas).
consider ourselves to be ‘the specialists’ in this area. We are regularly contacted
by businesses whose accountants just don’t handle (or understand) this
of these businesses need (and expect) an online bookkeeping system that caters
for the complex reports flowing from Amazon, PayPal, Stripe etc. They also need confidence that their VAT and
taxes are being properly handled.
know of an Ecommerce business proprietor that is struggling for advice from
their advisors and accountants or need certainty about their bookkeeping, VAT
registration requirements (including EU / international), VAT calculations and
schemes (and of course MTD) please ask them to contact us for a chat!
Hanley & Co Selected As One Of The UK’s Top Accountants
We are delighted to announce that Hanley & Co have been selected to join Handpicked Accountants.
Recently launched by the renowned Begbies Traynor Group, Handpicked Accountants is an online searchable database that aims to connect company directors and small business owners with accountancy firms that they know they can trust. Rather than having to take ‘pot-luck’ with one of the approximately 320,000 accountants in the UK, Handpicked Accountants features only firms which have been thoroughly vetted, often through years of working with the Begbies Traynor Group themselves.
David Tattersall, Head of Client Relations at Handpicked Accountants, said, “Hanley & Co deserves their place in our select list of only about 1,000 Handpicked Accountants, as a result of their dedication to their clients and their emphasis on providing an exceptional level of service at an up-front price. Too many business owners come to us looking for a new accountant after having been surprised by extra charges and unexpected bills. However we can guarantee that this will never happen with Hanley & Co and so we are delighted to be able to welcome them to the Handpicked Accountants family.”
Dean Logan, Partner at Hanley & Co, replied, “Being included in the Handpicked Accountants list is a real honour for us. We have always strived to provide our clients with fair, open and honest advice that they can trust, and our client testimonials show how many happy clients that we have. Whether it is providing accountancy, auditing, bookkeeping, tax advice, support for business start-ups, VAT, payroll and CIS or company formations and services, we ensure that we provide the best possible service for our clients all for a fair and upfront price. Hopefully via our inclusion on the Handpicked Accountants website we will be able to offer this to many new clients too.”
You can view our Manchester listing here and our Blackpool listing here