Is it possible to make a interest free loan from a partnership to a partner and if so how is this treated for tax reasons?
Also is it possible to take a loan from a bank then pass this loan on to the partners or is this dodgy territory? As we will not be passing the interest to the partner the partnership will cover this.
Questions And Answers
I would like to make a loan from Partnership to Partner
asked by Andy Bare posted 2 Years ago at 10:45
1-3 of 3 Answers
Jason Holden answered 2 Years ago at 13:17, last modified: 2 Years ago at 12:17Yes.
Partnerships are taxed on profits not what is or is not taken out.
The partnership can take a loan for business and cashflow purposes and get tax relief on the interest it pays on that loan.
Andrew Diver answered 2 Years ago at 14:53, last modified: 2 Years ago at 13:53I would suggest you need to be careful if you are looking to push a private loan through a partnership in order to obtain tax relief. The loan itself must be used wholly & exclusively for business purposes.
If the loan has been used to fund overdrawn partner accounts the interest will not be deductible.
a Bare answered 2 Years ago at 16:14, last modified: 2 Years ago at 15:14Andrew and Jason, thank you for the info you have provided, after consideration from your responses and other info i think it's a bad idea and a bit dodgy. But many thanks for taking the time to reply
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