Info needed on Loan between two shareholders

[chopkins]

Hi there

I have a client who is about to buy 4% shareholding in a company in which he has a 1% holding.

To facilitate the purchase he is going to loan the necessary cash( interest free) from one of the other shareholders who is also a director in the company.

Does anybody know of any tax problems in doing this?
Not my area of expertise, so over to you.

Thanks

:(

[Scotty]

Hi Chopkins.

A low interest loan is a taxable benefit. He would be taxed on the difference between the official rate (currently 5% i believe) and the rate he is paying, i.e. 0%

Scott.

[chopkins]

Hi Scotty

Thanks for the info. If the loan is a personal loan from the Directors personal account would this still apply.

Chris