Income tax relief for loan default?


S

Simon

Hi folks,

I'm salaried on PAYE. However, loan(s) I made out of net income to a
company will have to be written off, almost certainly in their
entirety. Can I claim relief for this against income tax? What about
NI? If so, is this a clean-cut exercise or are their any pitfall
features of the agreement that may exempt me?

Many thanks in advance,
Simon
 
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D

Dave T

Simon said:
Hi folks,

I'm salaried on PAYE. However, loan(s) I made out of net income to a
company will have to be written off, almost certainly in their
entirety. Can I claim relief for this against income tax? What about
NI? If so, is this a clean-cut exercise or are their any pitfall
features of the agreement that may exempt me?

Many thanks in advance,
Simon
Based on the info above, I don't think any relief will be available.

Essentially you were investing, with the reward presumably being
interest. There is always the risk that you might lose your capital.
 
D

DoobieDo

Based on the info above, I don't think any relief will be available.

Essentially you were investing, with the reward presumably being
interest. There is always the risk that you might lose your capital.
although troll stupidman will argue otherwise....
 
S

Simon

Simon said:
Hi folks,

I'm salaried on PAYE. However, loan(s) I made out of net income to a
company will have to be written off, almost certainly in their
entirety. Can I claim relief for this against income tax? What about
NI? If so, is this a clean-cut exercise or are their any pitfall
features of the agreement that may exempt me?

Many thanks in advance,
Simon
No.

Simon
 
T

Troy Steadman

Hi folks,

I'm salaried on PAYE. However, loan(s) I made out of net income to a
company will have to be written off, almost certainly in their
entirety. Can I claim relief for this against income tax? What about
NI? If so, is this a clean-cut exercise or are their any pitfall
features of the agreement that may exempt me?

Many thanks in advance,
Simon
I have the same problem with a loan I made to my wife which she has
spent, also an investment on the Grand National which seems to have gone
belly-up. Can I set that against PAYE? If so what about NIC?

So as not to disappoint Martin with an absence of "noise" did I read in
ukba a while ago somebody claiming that Professional Gamblers can be
assessed for tax? I find that surprising but hey-ho! my Professional
Gambling business has sustained losses in the early years and maybe I'll
get some PAYE back after all!



--
 
D

Doug Ramage

Simon said:
Hi folks,

I'm salaried on PAYE. However, loan(s) I made out of net income to a
company will have to be written off, almost certainly in their
entirety. Can I claim relief for this against income tax? What about
NI? If so, is this a clean-cut exercise or are their any pitfall
features of the agreement that may exempt me?

Many thanks in advance,
Simon
Unlike losses from subscribing for shares (in unquoted companies) which can
be set against income tax, but not NI, loans cannot.

However, the write-off might qualify for CGT loss relief.
 
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S

Simon Woodhead

Dave said:
Based on the info above, I don't think any relief will be available.

Essentially you were investing, with the reward presumably being
interest. There is always the risk that you might lose your capital.
Thanks for the quick reply Dave.

It was not interest bearing but was alongside an investment for equity.
I'm comfortable with the treatment of the equity side of it but thought
as the loan was more trading than capital, it might qualify.
 
S

Simon Woodhead

Doug said:
Unlike losses from subscribing for shares (in unquoted companies) which can
be set against income tax, but not NI, loans cannot.

However, the write-off might qualify for CGT loss relief.
Hi Doug,

That's the opposite way round to how I understood it. I had shares as
well and expected to claim a CGT loss for them but didn't expect I could
put it against income. Likewise, I did not envisage the loan could
conceivably count as a capital loss.

Thanks very much,
Simon
 
D

Doug Ramage

Simon Woodhead said:
Hi Doug,

That's the opposite way round to how I understood it. I had shares as well
and expected to claim a CGT loss for them but didn't expect I could put it
against income. Likewise, I did not envisage the loan could conceivably
count as a capital loss.

Thanks very much,
Simon
With shares, you have the choice. Normally, it would be a CGT loss, but you
can elect, under section 574 ICTA 1988, to set the loss against your income.
This only applies to a share subscription in an unquoted (including AIM)
trading company.

Loan Capital of a company sounds like a capital asset to me. :)
 
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S

Simon Woodhead

With shares, you have the choice. Normally, it would be a CGT loss, but you
can elect, under section 574 ICTA 1988, to set the loss against your income.
This only applies to a share subscription in an unquoted (including AIM)
trading company.
Excellent! Thank you.
Loan Capital of a company sounds like a capital asset to me. :)
I wish it was loan capital but it isn't :-(
 

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