Private loans

[Gazzer]

I have been offered a private loan for a van but not sure how this works with the tax situation. I would presume that as long as the accountant knows that the out going repayments are for this loan then its a business expense or am I being too simplistic ?

 

[Bubblecraft]

Best speak to your accountant but don't see it being a prob as a business expense

 

[AliGage]

Exactly the same as hirte purchase, renting a tool, skip hire etc. It's just another expence/over head i believe. I think you can even claim some tax back against it too.

 

[John Benton]

Exactly the same as hirte purchase, renting a tool, skip hire etc. It's just another expence/over head i believe. I think you can even claim some tax back against it too.

I'm pretty sure that it's treated as any other loan would be and offset against tax at the end of the year

 

[Ian]

The way my van loan works is, I'm paying for it over 60 months, every tax year 12 months is taken off my tax allowance. It's the better way of doing it because my accountant told me that if I'd paid straight out for it (let's call it £10,000) it would still be divided up over 5 years, so £2000 coming off the tax allowance per year. Basically whatever the monthly repayment x12 is, is included in your business expenses at the end of the year. Or that's how I understood it anyway!!!!

 

[Ajax123]

This might help. Not always as simple as we would like....

When Making a Personal Loan, Take Tax Implications Into Account - WSJ.com

 

[Gazzer]

This might help. Not always as simple as we would like....

When Making a Personal Loan, Take Tax Implications Into Account - WSJ.com

Does that apply in the UK though as I see its US based ?

 

[Ajax123]

Ah..... That being the case it might not help a all. Didn't pick up the US bit. Oops!

 

[John Benton]

Ah..... That being the case it might not help a all. Didn't pick up the US bit. Oops!

Didn't you notice the big Wall Street Journal header Alan :79:

 

[Dan]

If you loan the business 5k, you're allowed to take that 5k back without needing to pay tax on it I believe. Though it does need recording.

So if you've got a private loan, you've got the cash yourself, you lend it to the business, and then when payments come out of the business to you (for wages etc) you'd discount the figure from that. So you'd only end up paying tax on drawings from whatever the figure is onwards.

I've loaned my Ltd company 10k when I sold the car that was privately owned, for the amarok that is owned by the business. So when I worked the Tax out, I simply discounted 10k first, and then started with the 7-odd thousands tax-free that you'd normally start with, and then go on from there.

Had to show A) the receipt for the porsche (so it's not money laundering or whatever) and show the amount going from personal to business account, and then going from that to VW, and then I took the cash back in stages wage-wise, so noted that each upto the 10k was coming back from the loan.

Speak you your account though as I think I missed out on interest or something similar so diddled myself a little, but not sure.

 

[Ajax123]

Didn't you notice the big Wall Street Journal header Alan :79:

Had a few beers... Oops!

 

[Dan]

Did you manage to sort this out mate?

 

[Gazzer]

Yeah its all cool. Worked out well.

 

[Dan]

Did you manage to work out how you record it in the books?

 

[Gazzer]

Accountant says as long as I get a letter from the lender that the money in my account is indeed a loan and they see money going back out to repay then its all good.

 

[Dan]

So sort of what I assumed.

 

[Gazzer]

Yeah but pays to ask 1st.

 

[Dan]

Yeah totally, I just meant, I wasn't doing wrong the way I thought then lol
My accountant never really questioned what I did so never really got chance to correct me if I was doing it the wrong way.