.png)
.png)
A company had a plan for a new business venture, but required an injection of capital to progress. The shareholder’s wife loaned money to the company and is being paid interest. Is this allowable and what happens if the project does not proceed?
My client’s limited company has been trading for several years in the retail business. The shareholder/director had an idea for a new line of business and thought that he would carry this on under the same limited company “hat”. However capital funds were required to get the new project up and going.
The client’s wife had surplus cash sitting in her personal bank account and this was not yielding very much in the way of interest. She has therefore deposited £50 000 into the limited company account.
My client has agreed to pay 5% interest on the outstanding loan which will be repaid – probably in parts – as and when the company can afford it.
Is the interest deductible in the accounts and will this still be the case even if the company does not proceed with the project? The client’s wife is happy as she is receiving...
