Qualfying loans / Misc Flashcards
When does the saving rate apply.
When an individuals non saving interest after the PA is less than £5000
Any non saving interest is taxed at 20%
Any saving interest up to 5000 is taxed at 0%
This is in addition to the 1000/ 500 nil rate band
eg. NSI - PA = 690 SI = 45000
690 @ 20%
5000-690 @0%
500 @ 0%
What 4 types of loans qualify for tax relief
Loans taken out by an employee to purchase P&M for use in their business. However only interest paid in the year of the loan and next 3 years will qualify. Does not apply for car loans. If personal element need to apportion e.g. computer equipment for WFH. Includes P&M used in partnership
Loan taken out by an individual to purchases shares in a closed company. The individual must either work for the company and own some shares or own at least a 5% shareholding. The company must be a UK company of a resident in EEA state
Loan taken out to purchase shares in a employee owned company. Must be an unquoted UK trading company or a resident of EEA state
Includeds loan taken out to invest in cooperative
Loan taken out to buy into a partnership.
Discuss capital receoved
If the borrower receoves any capital in respect of the funds invested the capital receovered is deemed to have repaid the loan and therefore interest relief is restricted.
Sells shares in close company - proceeds are deemed to have paid the loan off
Distribution on liquidation - proceeds are deemed to have paid the loan off
Gift shares - gift at MV at the date of gift, even if gifted to spouse or civil partner still deemed to have recovered the capital
Interest distribution from a UK unit trust
received gross taxed as SI
Dividend received from an qualfying EIS invetsment
Taxable as dividend
Distribution from a UK discretionary trust
Received net of 45% tax (remember tax credit)
Taxed as NSI
Non reporting offshore fund
All income treated as NSI
Reporting offshore fund invetsing in equity
equity being shares therefore all - capital
