Lending money

[dx4100]

Hi All

Quick question. My dad needs £1.5k for some emergency house repairs and he hasn’t got it. I don’t want him to get stung for a loan for such a poxy amount and he is too proud to take the money off me privately but he would happily take a loan from my business though with a contract. He is old fashioned

£1.5k over 18 months at a reasonable interest rate (low as we can get away with ). What’s the implications of doing this i.e. tax etc and are there any rules I need to be aware. I did some searching but I can only find information on director loans but that’s not what this is surely ?

Is this possible or is it a no no for any reason...

Thanks for any advice....

[Manic]

You'll need a consumer credit licence.

[moony1234]

Make him a director, give him £1500 drawings into his directors loan, which he can then repay whenever....

I'm no account so not sure if this is 100% the way to do it, but it sounds about right!!

[Meades & Co]

The simple and easiest solution is as follows:-

Take a directors loan for the £1500 and pay the money in to your personal account. Then lend your father the money personally but explain to him that it is from the company originally so that he can stick with his principals. Don't charge any interest on the loan because then you'll have to pay tax on the income after allowing for any loan costs. As the loan is below £5k it doesn't have to be declared in your accounts so just pay it back later.

[Smurficus]

Take the money out yourself as a director's loan and knock up some dummy contract for him to sign.

He pays you back and you move dividends back into the loan account matching the repayments.

Oh, and shred the contract.

[Archangel]

Take the money out yourself as a director's loan and knock up some dummy contract for him to sign.

He pays you back and you move dividends back into the loan account matching the repayments.

Oh, and shred the contract.

Whs

i.e. Just lend him the money personally, but draw up a dummy contract to make him feel better.

[dx4100]

As always, thanks for the feedback guys

[Ken Dodd]

alternative

Liaise with the people doing the repairs and get them to bill you. By the time you have paid them it will be too late for anyone to complain.

i have done it.

[s2budd]

Whs

i.e. Just lend him the money personally, but draw up a dummy contract to make him feel better.

Yep. Best way.

[PhilAtBFCA]

Lending the family money

dx4100

There is some good advice here I think, I would be wary about involving any family in your business ( except a spouse ) for any reason. I do not mean to say "never", its just for the reasons you are stating I would not do it as it causes unecessary burdens on both your family and on you.

The most consistent advice seems to be lend him the money personlly and have a loan agreement with him in place with an interest rate you are comfortable with.

There is nothing to stop you loaning the money and getting an interest from it form a tax point of view. But dont forget you will pay tax on the interest and need to declare it in your tax return. A zero rate loan may be more appropriate perhaps ?

If you take the money from the company first, its still your money and however you account for it you will be liable for the tax on that income.

Phil