High Clarity Accountants

TAX TIP OF THE WEEK – Want to invest in a new business on the side but not sure how to fund it?

Putting money into a new company is nearly always risky, but doing it tax-efficiently means at least you will benefit in some way even it goes wrong. Here are a few of the options that have been summarised for you:

Personal Investment – you could use your own money to buy shares in the new co.
Pros – if you make a loss you can offset against CGT
Cons – you will only get a return if there is dividends available & the business wont get a tax deduction for the dividends

Personal Loan – you could lend money to the company
Pros – May be able to charge tax free interest on your loan & Co can claim a tax deduction
Cons – If the company fails you can only use the loss against other capital gains (not other income)

Company investment – your co could buy the shares in the new co
Pros – Any dividends received will be tax exempt

Company Loan – your co could lend money to the new co
Pros – if the new co fails then can get tax relief & can charge an interest to the new co so get a return

If you would like to discuss pro’s & cons of your own specific situation, click on the link to book in a call. https://bit.ly/3qFYVyK

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