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  • Tax

    First time Buy-to-let. Company or Individual?

    Thanks DL - I missed that change.

    I think you are right about directors loan being paid from post-tax profits, but that would be less than 40% as I said. I think this is the relevant government article - https://www.gov.uk/expenses-if-youre-sel...-financial - Where it says repaying a loan can not be claimed as a business expense.


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    Thanks for the Link every little helps

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    Learn Change and Adapt ?????

    AIUI The company does not have to pay tax on the profits it uses to pay back the Director's loan

    In the very simplest form: Director's loan = £50k, company profits for the year = £20k, all of which is used to pay back £20k of the Director's loan = no taxable profit and remaining Director's loan balance = £30k

    But the company does (in the simplest form) need to make a profit from which to repay the Director's loan and the Director should be careful to ensure that repaying the loan does not cause the company financial hardship

    As Director, you probably don't want to go down the route of charging interest on the loan unless you are using that interest income to use up your nil rate allowance

    If your loan is in a form other than 'cash' - i.e. you gifted the company some equity in a property that you transferred into it for instance, it is a different kettle of fish

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    I am in that Kettle of Fish so I relise the Company has to pay Corp Tax before it can return the Gifted Equity

    But at least I wont pay 40% to get it back

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    Learn Change and Adapt ?????


    Yes, this is because you can't really treat gifted equity as a loan

    If you had structured it as a loan, rather than a gift, you could withdraw it as if it had been a cash loan

    But I guess your lender wouldn't go with that?

    Take a look at the "Simple Sale" section of this piece for instance

    https://www.bkl.co.uk/bkl-briefing/proper...a-company/

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