Interest on money borrowed to invest in a company
Posted by Angela Clarke | Filed under Accounting, Latest News, Start ups, Tax
Interest on money borrowed to invest in a company S248-S250 TCA 97
You are entitled to claim relief for interest on money borrowed to invest in:
1. A trading company or
2. A holding company which holds shares in a trading company.
You may invest the money by buying ordinary shares in the company, lending money to the company, or paying of an existing loan that was used to buy shares in or loan money to a company. To qualify for the relief, you must meet the qualifying conditions:
1: You must have a material interest in the company i.e. own or control more than 5% of the companies ordinary share capital.
2: You must spend the majority of your time in the management of the company from the date of the loan until it is repaid
3: The borrowed money must be invested in the company with out delay.
4: Must be for bona fide commercial reasons and not part of any tax avoidance
If you do not meet the 5% holding or majority of your time involved in management you may also claim the relief if the following conditions are provided:
1: During the loan period you are a full time/part time director of the company or holding company
The interest is allowed as a deduction when computing your total income for the tax year in which the interest was paid.
Interest relief on loans to acquire shares in, or lend money to property or rental company is disallowed.
Interest relief to buy shares in a BES or film relief company does not generally qualify.
Tags: bes, film relief, Income Tax, interest, invest in a company, loans, loans to a company, S248-S250 TCA 97