Charlotte is the owner of Bamburg Ltd.

Charlotte:
– Is UK resident and UK domiciled.
– Owns 100% of the ordinary share capital of Bamburg Ltd.
– Earns an annual salary from Bamburg Ltd of £46,000 and has no other income.
– Has two ideas to generate additional cash in Bamburg Ltd.
– Wants to receive an additional £14,000 (after the payment of all personal taxes) from Bamburg Ltd on 30 June 2014.

Alternative methods of extracting an additional £14,000 from Bamburg Ltd:
– Bamburg Ltd to make an interest-free loan of £14,000 to Charlotte.

Required:
(ii) Explain the immediate tax implications for Bamburg Ltd and Charlotte of Bamburg Ltd making an interest-free loan of £14,000 to Charlotte. (5 marks)