It is often the case that an individual will have to borrow to fund the start up of their business. If the business is to be run as a limited company, the individual could use the borrowed money to lend to the company as a tax efficient way of injecting the borrowed money into the business. Income Tax Act 2007 provides for relief to be given to an individual who pays interest on certain loans, including a loan:

• to lend to a close company that is not a close investment-holding company; or
• to repay an earlier loan used for this purpose.

Various conditions have to be met for the relief to be given but even if they are met, no relief can be claimed if the company's business consists solely of the occupation of commercial woodlands.