Financing the company ― overview

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

How to raise sufficient finance to commence and continue operating is one of the most important considerations for most types of business.

There are some fairly obvious sources of financing, such as bank finance, however there are also several types of tax efficient financing available, such as the enterprise investment scheme (EIS) and venture capital trusts (VCT). Obtaining tax advice at an early stage to ensure that these reliefs are available can help attract and retain suitable investors. This guidance note explores some of the options available and the relevant tax considerations for each one.

Loans

Most businesses will have to take out a loan of some sort and the tax implications will differ depending on the terms of the loan and the identity of the lender. Generally, the loan relationships regime applies. See the Corporate debt ― overview guidance note and associated notes for information on the tax implications of corporate debt.

Bank loans and overdrafts

Interest arising on bank loans and overdrafts is usually allowable when it is accrued in the accounts. Certain costs

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