Gifting a Directors Loan for IHT purposes

by Readers Question

8:13 AM, 28th February 2019
About 11 months ago

Gifting a Directors Loan for IHT purposes

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Gifting a Directors Loan for IHT purposes

James asked ….

I asked some accountants about the directors loan in a company and they said you could gift the directors loan as a potentially exempt transfer for IHT purposes (tick! 😊) but that from the moment, you as a director could then not ever have that money repaid to you from the company loan account.

Is this right?

Response by Mark Alexander ….

Hi James

The advice you accountants have given you is correct, because you cannot have your cake and eat it. However, suppose you gifted the benefit of the loan to your adult children, the company could then repay part or all of the loan to them and in turn they could “lend” the money to you. The loan they make to you would further reduce the value of your estate.

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