Mark McLaughlin looks at the availability of capital loss relief when a loan to help fund an individual’s business becomes irrecoverable.
Individuals (e.g., sole traders or company owners) often lend money to their business to help fund its day-to-day operations. Unfortunately, some businesses ultimately fail. Consequently, the loan may become irrecoverable, resulting in it being written off.
Relief is at hand…or is it?
A crumb of comfort is that the individual may be able to claim a loss for capital gains tax purposes (under TCGA 1992, s 253) if the loan becomes irrecoverable in certain circumstances.
Broadly, the relief applies to money lent wholly for the purposes of the borrower’s trade (excluding money lending), profession or vocation (or to set it up). Bank overdrafts and credit card balances are capable of qualifying. Relief is also
