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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 16706
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have losses ( directors loans ) that i will not be able to

Customer Question

I have losses ( directors loans ) that i will not be able to ever recover from Limited companies i owned, which have seized trading . How can i utilise these losses against my personal income tax , rather than capital gains . My personal income is now from property rentals
JA: What are the assets or property for this capital gain?
Customer: shares in a limited company
JA: Anything else you want the Accountant to know before I connect you?
Customer: it should be clear from my summary
Submitted: 14 days ago.
Category: Tax
Expert:  TonyTax replied 14 days ago.

Hi. My name is Tony. I'm looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 14 days ago.

You cannot claim income tax relief for an unrecoverable loan to a company I'm afraid. It can only be relieved against capital gains. See HS296 here. As the companies have ceased trading HMRC would disallow any claim for income tax relief should you convert the loans into shares.

 

You can claim income tax relief for the capital losses on shares you had in your companies. See HS286 here.

 

I hope this helps but let me know if you have any further questions.

Customer: replied 14 days ago.
There are two companies , one has been struck off but it was never clear whether my investment was a loan or just capital investment ? The second company although not trading is still alive . These are ordinary private companies where I was the sole Director and shareholder , not in EIS scheme and so on . Are there any qualifying criteria for which type of companies or shares are acceptable , and do mine qualify?
Expert:  TonyTax replied 14 days ago.

Based on what you have told me you won't get tax relief for the loans simply because they are treated as capital losses and are only relievable against capital gains. Unless you have a share certificate for the loan that may be shares you are unlikely to get income tax relief for that one either. Check the company history on the Companies House website.

 

Your companies were ordinary companies. The rules around loans and shares are as I set out.