Non Trading Loan

Dawny Registered Posts: 62 Regular contributor ⭐
I would be very grateful for some help on the tax treatment of a non trading loan from a company to an individual.

Company A lent the individual £100k which accrued interest. This was never paid and so the loan was written off, the interest being carried forward as non trading deficit and the loan impairment being disallowed as an expense in the tax calculation. Was this correct, should the loan principle been included as a deficit? The issue now is that the loan will now be repaid, excluding the interest, and what to make sure it's correctly recorded so that it's tax neutral.

Thanking in advance for any comments.


  • Jagz1234
    Jagz1234 Registered Posts: 13
    What is the connection the individual has to the company? Are they related in anyway to the shareholders if so there would have been a S455 charge at the time of the loan, the write off would have resulted in the S455 being repayable.

    If they were not connected the write off was allowable for CT purposes, seems unlikely a company would give someone a £100K loan if there is no conenction unless the company is a bank.

    Assuming they were connected as the interest was not paid within 12 months of YE the income would not have been taxable until it was paid - this never happened.

    If the loan is being now paid it is simply a repayment of the capital therefore no income to report.
  • Dawny
    Dawny Registered Posts: 62 Regular contributor ⭐
    As far as I understand it, they were not connected. The loan was to an individual to raise finance on a project that the individual and the company would then work on, and perhaps profit from. Neither has control over the other.
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