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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4939
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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If I take a personal loan wholly and solely in order to make

Resolved Question:

If I take a personal loan wholly and solely in order to make an investment (not property), is the interest paid on that loan deductible from the returns made on that investment?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

I wish I could give you a more favourable news.

Unfortunately, unless it is an investment in the course of your business, interest paid on the loan to acquire the investment is not tax allowable and therefore not deductable for tax purposes.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

What if I were to set up a company (proprietorship) in order to make these investments? Would that make any difference? This is not a one-off investment, but rather is expected to be a regular transaction occurring roughly once a year, so it wouldn't be just a one-off special company of some sort.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

A company making investments and earning income from those investments would be able to claim interest payments as allowable expense as the incoem would be chargeable to corporation tax. May sure your object clause covers the activities you have in mind.

I hope this is helpful.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4939
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you. Just a last, quick question. The personal loan will be taken in my name, and then the investment will be made by the company. It would still be OK to set off the interest cost as a cost of the company?

Thanks very much for your help.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

There are occasions when directors fund company operations through personal funds.
My advice to you would be to have an agreement in place that recognises that this money is for business and then claim interest on loan payments.

More information on this can be found here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323775/hs340.pdf


I thank you for accepting my answer.

best wishes
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4939
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you

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