Limited company loan to another limited company under same director Limited company loan to another limited company under same director
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  1. #1

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    Default Limited company loan to another limited company under same director

    I guess this has been asked here few times, but couldn't get clarity on few points

    Scenario
    I've got my Limited company running for 6 years (OldCompany) and I wanted to start a small start-up company (NewCompany). Needed to have a seed capital of 20K for NewCompany which I was thinking to fund from OldCompany. I've got accountant for OldCompany but not planning for NewCompany as the profits may not be good enough initially.

    Few queries
    1. The company-to-company loan from OldCompany to NewCompany. If the Loan traverses the Company year end of
    OldCompany, will I need to pay corporation tax for that year on the loan from OldCompany? Or should I pay Corp Tax when NewCompany pays it back?

    2. Is it better to start NewCompany as subsidiary of OldCompany i.e. owned by OldCompany to get the loan?

    3. If I make a loss in NewCompany but say transfer only £15K back to OldCompany how does the calculations happen? If I setup as Subsidiary, will this be offset against OldCompany profits?
    Last edited by sojan; 14th May 2020 at 18:05.

  2. #2

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    Lance's Avatar
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    Number 2.

    Simpler and doesn’t mean cocking around with interest.
    Just use the initial £20k as the first capital and release some shares against it. I’d go for 200 shares so valued at £100 each.
    Old co becomes the owner. You can appoint yourself as a director.
    See You Next Tuesday

  3. #3

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    Quote Originally Posted by Lance View Post
    Number 2.

    Simpler and doesn’t mean cocking around with interest.
    Just use the initial £20k as the first capital and release some shares against it. I’d go for 200 shares so valued at £100 each.
    Old co becomes the owner. You can appoint yourself as a director.
    Cheers.

    Any idea for what happens for (1) and (2) ? i.e. in case of subsidiary how will it impact those two points?

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