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I would like to make a loan from Partnership to Partner

asked by Andy Bare posted 2 Years ago at 10:45
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.
1-3 of 3 Answers
Jason Holden answered 2 Years ago at 13:17, last modified: 2 Years ago at 12:17
Yes.

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.

Jason
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Andrew Diver answered 2 Years ago at 14:53, last modified: 2 Years ago at 13:53
I 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.
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a Bare answered 2 Years ago at 16:14, last modified: 2 Years ago at 15:14
Andrew 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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