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    I paid off my company’s overdraft with my own money, to allow the company to be closed down using the informal extra-statutory C16 procedure. Can I get any tax relief for the money that was used to repay the overdraft?

     

    It is possible to get tax relief for a loan made to a trading business, which is not repaid. However, the conditions are strict. The money lent must be used by the borrower wholly for the purposes of a trade it carries on. In this case, the company had already ceased trading, and funds were used to pay off a bank overdraft before the company was struck-off. In this situation you cannot argue that the money was used for the company’s trade as that had already ceased, so you cannot get tax relief for the lost funds. Even if all the conditions for the loan were met, the loss of the funds would be treated as a capital loss in your hands, and not relievable against income tax.

    in TAX Tags: extra-statutory C16fundstax relieftrading business
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