Singing Pig

Hello All

As a shareholder, but not a director or employee, of a limited company I made an unsecured short term loan to a limited company to assist with an envisaged short term cash flow problem.  As it happens, the directors blew the cash and never did make a profit.  I have had to accept that there is no interest coming and that I will be getting little more than 50p in the £ back.

My question is, as an individual, what are the tax implications for me?  Can I use the amount written off to reduce my tax bill?  Is the amount written off a Revenue item to set off against interest I never earned?  As a loan, was it an investment and hence can the written off amount be considered a Capital Loss to reduce my CGT bill?  I unfortunately have this suspicion that I may not be able to benefit from this write off in any way, but I would love to hear the views off any one with some experience of these things.  There will of course still be a Capital Loss on the shares themselves - but what of the loan?

Regards
Arbrook

It’s a quite involved question and will depend very much on the circumstances and nature of the loan and the stage at which this company is at (i.e. has it been formally stuck off now?). But yes you should get tax relief on this, how much, in what form and in what tax year is really down to your accountant to help you with. Make them earn their money this year!

Regards,

Thanks James

 The list of questions for you gets longer and longer.  I had better pick up the phone and get in touch soon.  You may well regret the comment about making them earn their money this year.  I also see that the self assessment forms have arrived for the next year and are sitting on my desk!!!

 Regards

Arbrook