Company start-up loan

stuart_m

I have a client who is starting up a limited company, and have been given a loan from a family member. There are no plans for the loan to be repaid at all, and was hoping for some guidance on dealing with the loan; can it be written off through P&L, or treated as a gift? Also what are the tax implications to any possible solutions?

Eastbury_7

Hi Stuart, I would say to treat it as additional capital to the business. The fact it was stated a loan yet there is no intent in paying it back indicates that technically it is not a loan, and therefore if this money is being used wholly for the business, then it should be added capital to the company and would be shown under the equity section in the balance sheet