Interest Free Company Loan Mess

richierich69

Hi,

A couple of years ago, I had some share options with my company. About a year after getting these share options, I was advised to take an 'interest free' / unsecured loan, to purchase the shares. This had some tax benefit, but meant that I had 50k worth of shares, and a 50k loan.

To me, 50k is silly money, but it was more seen as a base figure where if the company's share price went up by 10% I could sell me shares, and make 5k..

Obviously the worst is to come... the shares are now only worth about 2k, leaving me with a 48k debt.

The company assured me that they wouldn't chase me for the 50k. But not in writing... I'm sure if they went into administration, they'd try to recover this money.

This was all about 2.5 years ago, but in the past 6 months, the inland revenue have been chasing me for a 'benefit' related to the 'interest free' company loan, this works out at about 1.5k a year, and they're now after about 4k.

I'm no longer with that company, and the share price hasn't moved much, so it doesn't look like I'll be able to sell the shares for anything like the original figure.

When I was advised to take out the loan, there was no mention that although it was interest free, the revenue would charge me about 4.5% on it.. which is rediculous, and I'd have never taken it out in the first place if I had known this.

If the company writes off the loan (which I doubt they'll do), I have a tax liability for the captial gain, even though I've never benefitted from this.

Do I have any options ? or do I just keep paying the revenue 2k a year for the rest of my life ?

geoffky

Jesus mate what a bloody mess..i hope you come out of it ok...looks like you met some sharks.

opinions4u

Post in the "Cutting Tax" section of the forum.

Your income tax liability on the benefit in kind ended when your employment ceased.

I don't know enough about CGT to comment on that side of things though.