Tax affairs are made simple
business at 5% per annum. Her only other income is a small salary of £10,000 a year from her husband’s business. The £5,000 interest would potentially save up to 45% income tax plus national insurance for Mr Smith, whereas Mrs Smith would receive £5,000 interest tax free. CAPITAL TAX IMPLICATIONS OF THE LOAN Although the loan to the business in the example above is tax efficient (in that there is no income tax due from 6 April 2014) it would also be important to consider the CGT and IHT implications of the loan. Should the business default, it may be possible to obtain relief as a capital loss against capital gains in the same or future years. There would, however, be no inheritance tax business property relief should the lender die with the loan in place. Please contact us for further advice in this area. Please contact a member of our Tax Team if you would like to discuss any of the issues raised in this newsletter. You can find our details through www. broadbentsltd.co.uk (Please register) or phone us on 01422 347 880.