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Chris:
– Is employed by Methley Ltd and owns 10% of its ordinary shares.
– Is a higher rate taxpayer
– Methley Ltd would provide Chris with an interest-free loan of £9,600 on 1 October 2016.
– The loan would be written off in three years’ time.In the answer, the beneficial loan was treated as “9600 x 25%”. It was given, “When the loan is written off, this will be treated as a distribution as Chris is a shareholder in Methley Ltd, which is a close company.”
My question is, where did 25% come from and shouldn’t income tax be found for the “9600 x 25%” figure?
Not sure what material you are using as the close company legislation is relevant to ATX – NOT TX-UK – this is not in our syllabus
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