Tax relief on loan fees

Agrivator · Jun 1, 2019

If a long-term loan has an arrangement fee - say £1200 on a £100,000 loan, can the fee be offset against income tax. (I am assuming that the loan is for business purposes and that the interest can be offset against Tax).

If it can, it would be sensible to pay the fee rather than having it deducted from the loan.

Exfarmer · Jun 1, 2019

My answer would be yes , it is a genuine business expense so can be set against tax.
I am though not an accountant and my advice is worth what you have paid for it

farmerdan7618 · Jun 1, 2019

It's a yes from me too, as long as it is a loan for the business. Doesn't matter whether you pay it now or add to the loan, a good accountant will pick up that it is an arrangement fee as long as you give them the loan statement.
Anyone borrowing significant amounts of money should be speaking to their accountant and considering how they structure their business as this can make huge savings in how much profit is required to pay it back.

StroggCore · Jan 17, 2020

Hey! I know this is an old thread, but maybe someone of you will answer my question? I want to take a small loan for small business. Nothing more than a $1000 I think. People from Expert Payday Loans company said that they will give it to me with a small interest rate. Can I expect a tax relief in this case? Or it's available only when you borrow a really big amount of money? I just want to do some economy. And, to be honest, I'm not quite sure if my business will be successful at all. Want to reduce a risk.

puppet · Jan 17, 2020

Any company with the word Payday should be approached with caution. Rates likely to be high

StroggCore · Jan 17, 2020

puppet said:
Any company with the word Payday should be approached with caution. Rates likely to be high

Do you think so? Well... maybe. I will be careful.

Still Farming · Jan 17, 2020

Think overdrafts all changing in March.
HSBC going from 19% to 35% interest rates???

pellow · Jan 17, 2020

Can you not get a credit card with a decent rate for £1k? Or a small business loan from a bank?

Highland Mule · Jan 17, 2020

StroggCore said:
Hey! I know this is an old thread, but maybe someone of you will answer my question? I want to take a small loan for small business. Nothing more than a $1000 I think. People from Expert Payday Loans company said that they will give it to me with a small interest rate. Can I expect a tax relief in this case? Or it's available only when you borrow a really big amount of money? I just want to do some economy. And, to be honest, I'm not quite sure if my business will be successful at all. Want to reduce a risk.

Welcome to the Farming Forum. You should be aware that this is an international forum, albeit predominantly UK based. I sense that you are not from the UK, given you are quoting $ and not £, and as such you probably want to take local advice.

d williams · Jan 17, 2020

Still Farming said:
Think overdrafts all changing in March.
HSBC going from 19% to 35% interest rates???

Surly that’s unarranged rates??!

Cowabunga · Jan 17, 2020

StroggCore said:
Do you think so? Well... maybe. I will be careful.

Payday loans are meant to tide someone over until payday. The clue is in the name. If you have a credit card, perhaps that could be a better source of short term capital?

Cowabunga · Jan 17, 2020

Still Farming said:
Think overdrafts all changing in March.
HSBC going from 19% to 35% interest rates???

Not for an arranged business overdraft.
Best bet for an unsecured but reasonably substantial loan is one of the supermarket banks. A personal loan from Sainsburys, Tesco or M&S. You might need a history of banking with them but since I've never tried, I can't be sure about that.

Cowabunga · Jan 17, 2020

I've had a look at the website and it is USA based. It is not a lender. It is a broker that puts people in touch with short term lenders, no doubt for a hefty fee. As a broker they do not offer to publish the costs/fees/interest rates, and suggest that the borrower get in touch directly with the lender for such information.
I'm afraid that it sounds like the last refuge for the desperate to me.

Still Farming · Jan 17, 2020

d williams said:
Surly that’s unarranged rates??!

Things are altering in personel banking.

Exfarmer · Jan 17, 2020

d williams said:
Surly that’s unarranged rates??!

Believe Santander are talking 39.9% for all overdrafts coming to your high street very soon

Still Farming · Jan 17, 2020

Exfarmer said:
Believe Santander are talking 39.9% for all overdrafts coming to your high street very soon

All change March

Old McDonald · Jan 17, 2020

d williams said:
Surly that’s unarranged rates??!

I had a circular letter yesterday from my UK bank - Clydesdale. It states that as from 1st April Arranged overdraft rate will increase from 17.39% to 18.29% and Unarranged from 0% to 18.29%. I have not made an error in posting, but I think somebody at the bank has because although I do not have an overdraft I am sure that the present rate on unarranged overdrafts is not 0%.

A bit of good news for me is that they are scrapping the fee if I use my bank debit card to make payments or withdraw cash outside the UK. Given the other error I am keeping the letter in case they have made a mistake about the debit card too.

d williams · Jan 18, 2020

Old McDonald said:
I had a circular letter yesterday from my UK bank - Clydesdale. It states that as from 1st April Arranged overdraft rate will increase from 17.39% to 18.29% and Unarranged from 0% to 18.29%. I have not made an error in posting, but I think somebody at the bank has because although I do not have an overdraft I am sure that the present rate on unarranged overdrafts is not 0%.

A bit of good news for me is that they are scrapping the fee if I use my bank debit card to make payments or withdraw cash outside the UK. Given the other error I am keeping the letter in case they have made a mistake about the debit card too.

Has the date they say it’s happening any significance??? ???
Are the banks wanting fixed loans rather then overdrafts then or is there something going on that we’re not aware of

Farma Parma · Jan 18, 2020

Bloody Arrangement Fees annoy me then they want there cake on top......
Business banking this & hiking rates to double what they were just 3years ago.
for no reason whatsoever other then they want more out of us.

Looking elsewhere for banking is on the cards id say, we must have been with the bank too long eh & just take you for granted.

lazy farmer · Jan 18, 2020

Overdraft rates are changing because the FSA and the Bank of England have tightened up in other areas so high street banks have to make a profit somewhere.....
Plus it’s supposed to act as a deterrent to those who use their overdrafts as a way of life...

Tax relief on loan fees

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