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Post by gsp on Sept 18, 2019 10:32:55 GMT
Has anyone tried out the Directors IFISA with this platform? It apparently allows you to take out bit of extra cash out of your business and then give RS a small cut, their calculator is a bit iffy and apparently HMRC are ok with it.
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gb007
Member of DD Central
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Post by gb007 on Sept 18, 2019 12:25:19 GMT
I'm reading it as a Director being able to lend to their own company inside a tax free ISA wrapper. As it is achieved using a peer-to-peer loan agreement inside an IFISA, interest can be paid to the director tax free and without the admin hassle of withholding taxes, CT61 forms etc. A private syndicate listing on the platform can include Director's other family members and business partners etc as loan participants. On the face of it, a truly innovative and potentially useful product to SME's.  |
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IFISAcava
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Post by IFISAcava on Sept 18, 2019 17:26:34 GMT
I wonder what justification HMRC might need to prove that your company actually needed the loan, i.e. that it isn't just a way to extract cash tax free from your company?
It I lend my company £20K and it gives me back 18% tax free a year (£3600), which it then claims against corporation tax, I've just avoided 19% corporation tax on that money within the company and 38.1% I would have paid taking it out as a dividend. The next year those sums would be doubled. Etc etc.
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gb007
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Post by gb007 on Sept 19, 2019 11:55:50 GMT
I wonder what justification HMRC might need to prove that your company actually needed the loan, i.e. that it isn't just a way to extract cash tax free from your company? It I lend my company £20K and it gives me back 18% tax free a year (£3600), which it then claims against corporation tax, I've just avoided 19% corporation tax on that money within the company and 38.1% I would have paid taking it out as a dividend. The next year those sums would be doubled. Etc etc. I would imagine that HMRC would require the usual proof for any loan. In particular, corporation tax loan interest relief is split depending on the purpose of the loan, between trading and non-trading. AIUI, in your example, if your loan was for trading purposes (eg to purchase business equipment) then the interest can be set against trading profits. If your loan was for non-trading purposes (eg to purchase shares as an investment) then the interest expense can only be set against non-trading income. The interest payable would have to be at a commercial rate for an unsecured loan. See trading/non-trading loan relationships here www.gov.uk/hmrc-internal-manuals/corporate-finance-manual/cfm32010 etc. Therefore, it could be used to achieve your above example if you are going to lend to your company for trading purposes anyway (or if you will have non-trading income to cover the interest paid for a loan for non-trading purposes). 
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Post by gsp on Sept 20, 2019 11:39:59 GMT
RS will provide the documents for the proof of the loan. The issue I see is that you can not have any other IFISA
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IFISAcava
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Post by IFISAcava on Sept 20, 2019 12:41:47 GMT
RS will provide the documents for the proof of the loan. The issue I see is that you can not have any other IFISA why not? you can transfer previous years' ISA money from whatever source into this one and to however many other IFISAs you like. you just cant contribute current tax year's money to more than one IFISA.
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Post by danraj on Feb 6, 2023 10:00:39 GMT
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Post by ndblog on May 13, 2023 11:28:56 GMT
What are "connected parties" now doing with their balance? Transferring it to another ISA (can it be any type of ISA) or just leaving the money sitting there?
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