He hasn't given himself a loan. He loaned NUFC the business from his personal wealth rather than do what must other clubs do and use an overdraft that would charge interest.
A life of a Mechanical Engineer, lots of spare time waiting for simulations to complete! So need something to fill the time between brews.
Same time same place. This thread is getting mahoosive and seems to be messing with my phone. Anyone else?
At a quick glance the interest you work out is simple interest there but it should be compound (so 144 x 1.03^13) and comes out as more like £67.5m. Whether any of your figures can be accepted are a different argument but if he's getting interest then he's also getting interest on his interest.
did my time/HNC as an electrical engineer(technician) so spent plenty of time commissioning bottling plants/lines around UK/world. Changing a few lines of code and getting fitters to do the graft. did my time grafting and pulling cables. Was on Baltic bridge when first installed pulling cables over for two weeks. Prefer sat in an office now
So basically it will just drop like a bomb. it would only be compound if it wasn’t Paid. If the interest was paid to him. Debit profit and loss credit bank. Then in year two the loan is still the same value.
That’s the legal answer. The reality is he is lending himself the money. He saved himself having to pay bank interest.
Well yes and no. It’s nothing to do with law. If you have cash and you can afford to lend the business money then you do. If You don’t you loan from the bank. It’s pretty standard stuff in the accountancy world. For example I setup my own company 2 years ago. I put 10k in. That’s my loan to the company and it goes to your directors loan account. I could have charged interest at whatever rate I wanted. But I have to account for the interest as an income as it’s taxable. In some respects it’s within the realms of the companies act which is law. And the loan input in I can draw back tax free as it’s my money and it’s a liability of the company.
