Mark McLaughlin looks at capital loss relief for ‘loans to traders’ and another dispute between a taxpayer and HMRC over the availability of the relief.
Business owners often lend money to their own business (e.g., to support it through cashflow difficulties). Unfortunately, the business may subsequently be unable to repay the individual’s loan, such that the debt becomes irrecoverable.
However, loss relief may be available in this context. This article focusses on the capital gains tax (CGT) relief for loans to traders.
That’s a relief
Broadly, an individual who makes a loan to a trade (e.g., their own or a family member’s) may be able to claim a loss for CGT purposes (under TCGA 1992, s 253) if the loan has become irrecoverable at the time of the claim, and certain conditions are satisfied. The conditions include that the
