Hi
I bought a UK BTL property bought using a SPV.
The purchase price of the property was £300,000
I've len £90,000 (30% Deposit) to the SPV and I've got a Director's Loan Account (DLA), showing that the SPV owes me £90,000.
Should I charge interest on £90,000? How much interest should I charge on the £90,000 loan?
Your HMRC website shows interest rates of 2.25% for 2025/2025
https://www.gov.uk/government/publications/rates-and-allowances-beneficial-loan-arrangements-hmrc-official-rates/beneficial-loan-arrangements-hmrc-official-rates
30% deposit £90,000
70% mortgage £210,000 through a bank.
I understand that Corporation Tax is charged at 19%.
I receive rent payment and pay mortgage, agency fees, service charges, insurance, repair costs etc.
My DLA (Director Loan Account) £90,000
For Example, Assume my Rental Income is £24,000
My Expenses (£14,000):-
Mortgage Interest £10,000
Service Charge £500
Agent Commission £2,000
Repair Costs £1000
Insurance £500
Gross Profit: £24,000 - £14,000 = Net Profit £10,000
Would I have to pay Corporation Tax > £1,900 < ?
As Net Profit is £10,000 could I reduce my DLA by £10,000 so that it's now (£90,000 - £10,000 = £80,000), tgis in turn would make my profit = Zero.
As the SPV still owes me £90,000 , do I need to pay Corporation Tax as the SPV has to repay the £90,000 back to me?
Can I offset all profits until the debt has been repaid? In effect pay no Corporation Tax, until the £90,000 has been repaid back to me?
