Nocturne Ltd, a partially exempt company for the purposes of value added tax (VAT), requires advice on the corporation tax implications of providing an asset to one of its shareholders; the income tax implications for another shareholder of making a loan to the company; and simplifying the way in which it accounts for VAT.

Nocturne Ltd:
– Is a UK resident trading company.
– Prepares accounts to 31 March annually and expects to pay corporation tax at the rate of 20%.
– Has four shareholders, each of whom owns 25% of the company’s ordinary share capital.
– Owns a laptop computer, which it purchased in October 2012 for £1,200, and which has a current market value of £150.
– Has purchased no other plant and machinery for several years and the tax written down value of its main pool at 31 March 2015 was £nil.

Provision of a laptop computer to one of Nocturne Ltd’s shareholders:
– Nocturne Ltd is considering two alternative ways of providing a laptop computer in the year ending 31 March 2016 for the personal use of one of its shareholders, Jed.
– Jed is neither a director nor an employee of Nocturne Ltd.
– Option1: Nocturne Ltd will buy a new laptop computer for £1,800 and give it immediately to Jed.
– Option 2: Nocturne Ltd will gift its existing laptop to Jed and will purchase a replacement for use in the company for £1,800.

Loan from Siglio:
– Siglio will loan £60,000 to Nocturne Ltd on 1 October 2015 to facilitate the purchase of new equipment.
– Siglio is both a shareholder of Nocturne Ltd and the company’s managing director.
– Nocturne Ltd will pay interest at a commercial rate on the loan from Siglio.
– Siglio will borrow the full amount of the loan from his bank on normal commercial terms.

Required:
(b) Explain the income tax implications for Siglio of providing the loan to Nocturne Ltd. (4 marks)