I gave a personal guarantee for the overdraft of my property development company. Unfortunately, the company went bust and I had to repay the overdraft personally. Can I get any tax relief?
It is possible to get tax relief when you are called on to honor a guarantee made for an overdraft of a UK trading company. The amount you had to pay to the bank under the guarantee is treated as a capital loss for the tax year in which you made that payment. This will not reduce your income tax liability, but you can set the loss against capital gains you make in the same year or subsequent tax years. The Taxman may argue that the company was an investment company and was not actively trading to try to deny you the tax relief.
