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bigduckontax, Accountant
Category: Tax
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Have just invested £100,000 into a newly formed commercial

Customer Question

Have just invested £100,000 into a newly formed commercial LLP. What is the best way to treat this investment, as Capital Introduced or as Loan Capital to obtain the most tax relief. Is their any relief in respect of this investment other than through the initial trading losses comparable to the EIS scheme, Entrepreneurs Relief, ......?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. If you introduce this as capital then on ultimate disposal any gain will be subject to Capital Gains Tax (CGT), but Entrepreneurs' Relief will apply which will limit the CGT to a flat rate 10% instead of the usual 18% or 28%. EIS applies to limited companies; a LLP is not a limited company. If introduced as loan capital its ultimate withdrawal will be outside the scope of taxation. However, any interest earned will be subject to Income Tax at your marginal rate. I do hope my reply has shed some light on your investment.