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One of my companies has a spare £100K, another of my

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One of my companies has a spare £100K, another of my companies could do with an injection of cash. If I lend from one to the other, what are the tax impications?
Submitted: 11 months ago.
Category: Tax
Expert:  bigduckontax replied 11 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

In a word, none whatsoever; however, if the lending company charges interest on the loan, then that interest forms part of its income for Corporation Tax (CT) purposes whilst the same interest is allowable against the CT liability of the borrowing company.

If, however. these companies form part of a company group then any interest charged is irrelevant as profits and losses my be moved up down and sideways as convenient to reduce the group's CT exposure.

I do hope that you have found my reply of assistance.

Customer: replied 11 months ago.
Thank you for your reply. Sorry for my ignorance - just so I am clear. The 100K we have in one company would have been "profit" in this current year. By lending it to the other company does that mean we will not have to pay corporation tax on it in the lending company?Thank you.
Ginna
Expert:  bigduckontax replied 11 months ago.

No; the loans is effectively outside the scope of tax save where interest is involved.

You will not escape CT on the 100K profit earned by the lending company.

I am so sorry to have to rain on your parade.

Please be so kind as to rate me before you leave the Just Answer site Ginna.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3613
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 11 months ago.
Many thanks, ***** ***** if I were Chancellor . . . . :)
Expert:  bigduckontax replied 11 months ago.

Thank you for your support.

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