Paying back Loan

[SandyD]

Sorry naïve question, but if one takes a loan from Ltd company, then pay it back monthly (yes I know with %), would the monthly payment back trigger CT tax as well? i.e. would the loan repayment be considered as income for the ltd?

[Alchemy Accountancy]

Sorry naïve question, but if one takes a loan from Ltd company, then pay it back monthly (yes I know with %), would the monthly payment back trigger CT tax as well? i.e. would the loan repayment be considered as income for the ltd?

The capital element of the loan repayment would not be considered income, but any interest paid to the company would be considered income and taxed accordingly.

[northernladuk]

Sorry naïve question, but if one takes a loan from Ltd company, then pay it back monthly (yes I know with %), would the monthly payment back trigger CT tax as well? i.e. would the loan repayment be considered as income for the ltd?

I'm sure you'll get the right answer for your question but with a such a level of naivety should you really be buggering about with company loans? If you aren't sure about that what else do you not know?

Get a loan wrong and it's going to cost you a lot more than if you'd taken one personally.

[Maslins]

Sorry naïve question, but if one takes a loan from Ltd company, then pay it back monthly (yes I know with %), would the monthly payment back trigger CT tax as well? i.e. would the loan repayment be considered as income for the ltd?

Nope...in the same way when the company lent the money to you it didn't get tax relief. In geek speak it's the difference between a balance sheet movement and a P&L movement. The interest charged is the only bit that impacts the P&L.

If you're not confident what you're doing, I'd recommend against borrowing from your Ltd Co. Tends to be a recipe for disaster. Great in the short term as it's (temporarily) tax free cash you can spend, but often just means making your life hell a year down the line.

[SandyD]

I'm sure you'll get the right answer for your question but with a such a level of naivety should you really be buggering about with company loans? If you aren't sure about that what else do you not know?

Get a loan wrong and it's going to cost you a lot more than if you'd taken one personally.

haha.. I knew you will pop round with some kind of insult ... lol no worries NLD, I wont do anything without my accountant approval and knowledge just trying to collate some further information for the future

[northernladuk]

haha.. I knew you will pop round with some kind of insult ... lol no worries NLD, I wont do anything without my accountant approval and knowledge just trying to collate some further information for the future

It's not an insult. It's a perfectly valid question based on your original question not knowing the basics of company income.

It's also based on the fact you asked about commercial loans last year which was a bit of drag of a thread as well.
You tend to ask a very simple question on a complex topic and it takes an age to get to the reality of the situation which can affect the advice given.

And Maslins has also mooted the same warning I did about loans.

[SandyD]

If you're not confident what you're doing, I'd recommend against borrowing from your Ltd Co. Tends to be a recipe for disaster. Great in the short term as it's (temporarily) tax free cash you can spend, but often just means making your life hell a year down the line.

Yes thanks for the info and the warning, I am aware, but I need the money, either I have a loan and pay tax +interest on it gradually or take it as divs and get skinned with 40% tax on total amount by end of year...
I know the consequences on my SA.. but wanted to know if my gradual repayment of the loan would trigger CT ... the answer is great, so I pay CR on the interest portion not on the total repayment. Thanks for the info.

[SandyD]

It's not an insult. It's a perfectly valid question based on your original question not knowing the basics of company income.

It's also based on the fact you asked about commercial loans last year which was a bit of drag of a thread as well.
You tend to ask a very simple question on a complex topic and it takes an age to get to the reality of the situation which can affect the advice given.

And Maslins has also mooted the same warning I did about loans.

Yep, I took commercial loan last year to invest some cash... am after more loans this year (well after the new financial year in April) shock shock shock horror !!

[northernladuk]

Yep, I took commercial loan last year to invest some cash... am after more loans this year (well after the new financial year in April) shock shock shock horror !!

Why add that? You've already got a loan and you are after more? It's not unreasonable for us to flag this as a massive risk and ask questions without you adding that rubbish.

Isn't the S445 going to be a real issue? Bed and breakfasting isn't going to be an issue here is it?

[simes]

haha.. I knew you will pop round with some kind of insult ... lol no worries NLD, I wont do anything without my accountant approval and knowledge just trying to collate some further information for the future

Worry not about him, not that you appear so.

He misconceives that Asking a question is to actually reduce naivety. And that asking several sequential questions allows for a path towards knowledge. Consider his only as a series of witless hurdles towards enlightenment.

Can I ask the value of your loans? I ask only as anything sub £10k stays below HMRC radars if paid back within the year.