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Underwriting loan

18 June 2013
Issue: 4407 / Categories: Forum & Feedback , Business

A husband and wife are the directors of a limited company that has been set up to trade as a Lloyd’s underwriter. The husband has borrowed money to lend to the company as collateral, but this has been invested in National Savings in his wife’s name. What effect will this have on a claim for relief for loan interest paid?

I borrowed £350 000 on an interest-only mortgage in my own name against my home which was previously unmortgaged. The loan was arranged specifically to raise capital as collateral for Lloyd’s insurance underwriting by a limited liability close company Nameco which I set up in 2011.

I transferred the cash sum directly to an account of Nameco of which my wife and I are joint directors. My plan had been either to offset the mortgage interest charges against my own personal income or to charge the cost of this loan to Nameco against its future income.

The entire capital was invested by Nameco in National Savings certificates. National Savings do not allow their certificates to be held in the name of a corporate vehicle and they were therefore invested in my wife’s name rather than Nameco’s as would be the case for any...

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