Interest Free Loan - A good idea?

[slackbloke]

Does anyone make an interest free loan from their company to themselves?
My understanding is you can loan up to £5000 as long as it is paid back within 9 months of the end of the accounting year. My thinking is that,as I need to keep back the money that needs to be paid for comporation tax until 9 months after the accounting year as well, I might as well loan myself the the max £4999 (and use it to offset my mortgage) until it needs to be back with the company.
Does that make sense? Also what is the criteria for making a loan? Does it need to be to a director? or an employee?

[Nixon Williams]

Does anyone make an interest free loan from their company to themselves?
My understanding is you can loan up to £5000 as long as it is paid back within 9 months of the end of the accounting year. My thinking is that,as I need to keep back the money that needs to be paid for comporation tax until 9 months after the accounting year as well, I might as well loan myself the the max £4999 (and use it to offset my mortgage) until it needs to be back with the company.
Does that make sense? Also what is the criteria for making a loan? Does it need to be to a director? or an employee?

Technically you can do this but you can get caught out with other rules that make it costly. The limit is £5000 but if you exceed this by just £1 (and this can be done by accident) then the loan can be taxed as a benefit in kind on the interest free sum. Your company would also be laible for NIC.

My advice is to avoid this and keep it simple.

Alan