Can my client claim tax relief if she invests in another business?

Hez
Hez Registered, MAAT, AAT Licensed Accountant Posts: 3 New contributor ?
edited November 2023 in Tax
I have a client who would like to invest in another business. As I've never dealt with clients investing in other businesses and I'm not sure if this is tax deductible so not sure what to advice her regarding tax relief. All the info on the internet is a minefield so any help would be appreciated.

Answers

  • AndrewLeyland
    AndrewLeyland Registered, MAAT, AATQB Posts: 37 Regular contributor ⭐ ? ⭐
    It not exactly straight forward. Is your client investing from there own funds or the business funds? Is your client a Limited company? Amount being invested is it more/less or equal to trading profits? is it a investment with shares in return or a loan?
    RegardsCiaran Andrew Leyland
  • Hez
    Hez Registered, MAAT, AAT Licensed Accountant Posts: 3 New contributor ?
    Hi Andrew, thanks for responding. She is investing from her business into another business. Yes she has a limited company. No it is much less than her trading profit. It is a loan but there is not fixed repayment in place.
  • AndrewLeyland
    AndrewLeyland Registered, MAAT, AATQB Posts: 37 Regular contributor ⭐ ? ⭐
    if it is a loan then it is not treated as a expense so this wont reduce your corporation tax. Also any interest on the loan will be classed as income so will be taxable. Also it could restrict some future intentions on using entrepreneurs relief. Loans are complicated when comes to tax so be worth doing some more research. Reason for questions because it it was shares and buying into a business with dividends being paid out it be look at differently.
    RegardsCiaran Andrew Leyland
  • Hez
    Hez Registered, MAAT, AAT Licensed Accountant Posts: 3 New contributor ?
    Thanks Andrew, I'll let her know to seek further advice before committing. Your help has been much appreciated. Hez
    AndrewLeyland
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