Loan repayment planner

Because it is their own money coming back. A loan repayment is a return of capital, not income or a gain, so the parents pay no income tax or capital gains tax on it. That is a main reason families fund a family investment company by loan: they keep access to the capital while the growth builds up for the children.

Yes, at face value, to the extent it has not been repaid. The loan is an asset of the parents, so inheritance tax applies to it on death. The planner shows the remaining balance for that reason. Repaying it reduces what the company owes but brings the cash back into the parents' estate, so repayments do not save inheritance tax by themselves.

The amount repaid in the year, the loan balance remaining at the end of the year and the cumulative total repaid. Together these show how quickly the loan comes down and how much stays in the estate. The figures are based on equal annual repayments over the period you choose, so they are an illustration rather than a schedule the company has to follow.

Not necessarily. The loan agreement can allow repayment on demand or at the company's discretion, and it is often drafted to be flexible. What the agreement says is what matters. The planner uses an even schedule only to illustrate how a loan can be repaid, and a real repayment plan depends on what the company can afford.

It can, and the planner has an optional interest setting. Interest the company pays to the lender is generally a deductible expense for the company but is taxable income for the parent receiving it, so it can create a tax cost at their marginal rate. Many family investment companies lend interest-free, though the choice depends on the circumstances.

From its investments, by selling assets, receiving income or using cash. The company can only repay what it can afford, and it must keep enough to meet its tax and running costs. The planner does not model the company's cash, so the repayment figures show what is possible in principle rather than what the company will actually be able to pay.

The loan is part of the lender's estate, so the executors can ask the company to repay it, or the benefit passes under the will. Its value for inheritance tax is the amount still owed. The loan agreement and the will should be drafted with this in mind, and this is one reason a family investment company needs a solicitor as well as tax advice.

If the investments fall in value, the company may be unable to repay the whole loan. The loan is then worth less than its face value, which could reduce the inheritance tax on it, but the lender has lost money. This is a commercial risk to weigh before lending. The planner assumes the company can meet the repayments you enter.

It reduces the inheritance tax benefit if the repaid money is kept rather than spent, because the cash returns to the parents' estate. Equally, a loan that is never repaid does not give the parents access to the capital they may need. The planner helps you see the trade-off, so you can balance access to money against the amount that stays in the estate.

No. It is a rough illustration. It ignores the terms of an actual loan agreement, interest, the company's investment performance and its tax. Your repayment plan should be agreed with your adviser and documented by your solicitor, who can also confirm how the terms affect the loan's treatment. All calculations run in your browser, and nothing is stored.