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Post Info TOPIC: Interest on personal loans
rowets


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Interest on personal loans
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Hi again all,

Just a question that I'm having a bit of trouble answering with confidence;

3 partners all introduce £10k of capital each to set up a business.  The capital is raised by way of personal loans taken out by each partner.  The repayments for these loans are made from the partnership bank account each month, in full.  Can the business claim tax relief on the interest, ie all repayments credit tne bank account and debit the partners individual drawings with the capital portion and the P&L with the interest portion?  Or is it not possible for the business to claim tax relief on their personal loans and all of the repayments should actually debit the partners drawings accounts in full?

Any help appreciated.

Thanks,
Tim

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Tim Rowe
TSR Accountancy & Bookkeeping Services
Fay


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Given the loan was taken out for business purposes the interest will be allowable in the accounts. As you described the gross repayments go to the capital account and the interest can be debited to the P&L and credited to the capital account.

Best wishes.

Fay



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rowets


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Hi Fay,

Just returned from holiday and seen your reply, thanks.

Thank you for your advice, I really wasn't sure whether the interest was allowable with the loans all being private to each partner.

Regards,
Tim

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Tim Rowe
TSR Accountancy & Bookkeeping Services
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