Loan to Business

Possetjohn

Hi all you tax experts out there,

I have a question which hopefully has an easy answer, but I can't decide which way it should be!
I have a self employed sole trader business, mainly gardening services, and recently lent money to the business to buy a second hand van.

My question is how to treat the loan repayments (capital sum only, no interest) from the business.

Should it be from the taxable profits of the business, i.e as drawings, or should it be a straight repayment treated as a business expense?

I am thinking it should be the former as the van capital cost is subject to capital allowances, but obviously would like it to be the latter!!

I just keep going round in circles and the HRMC site wasn't any help!

Thanks in advance
John

Pennywise

No tax effect - money going in is cash introduced and money coming out is drawings. Yes, you're right, you get tax relief by claiming capital allowances on the asset purchase.

Possetjohn

Thanks Pennywise,

Thats is the way I thought it would be! Just hoped it might be different
Regards
John

Debt_Free_Chick

Just to be clear ..... you do not show the money you lent as "turnover" or "sales" or business income - it's a balance sheet entry not a P&L item.