Consider paying interest on loans to your business
If your business needs a helping hand in the form of a loan and you have access to personal funds then it could be a win-win situation for you and your business. Of course a few factors come into play.
Business in a time of need for extra cash?
If you lend your business £10k in a time of need and add interest on commercial terms, your business can deduct the interest proportion and receive tax relief. You on the other hand can receive the interest income personally and it can contribute to your annual earnings. Depending on the rest of your tax position though will depend if this interest income will be subject to income tax or not.
Eliminate all income tax
The other option could be if your spouse or significant other has access to funds but doesn’t earn any other income. If they make the loan to your business this could eliminate any income tax and still bring money into the household.
In summary, if your business needs an injection of funds then there may be a tax efficient way of doing this. First, all tax positions need to be clarified for all relevant parties.
[dropshadowbox align=”none” effect=”lifted-both” width=”550px” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ]The team at Figurit deal with situations like this every day with the aim to save our clients tax. Call today on 020 7376 9333 to discuss further. [/dropshadowbox]