Taking Loan from my Company

[Goodmans]

Hi there,

Me(Director) and my wife(secretary) want to take 5000+5000 loan.

What is the further steps. Some one was saying that We will have to pay the 5% tax if the loan exceeds 5000? Is it correct?. What if i replay 50% loan by the end of tax year. Is it ok to give loan to wife?

Please help me.

Regards
Goodmans

[Gonzo]

Hi there,

Me(Director) and my wife(secretary) want to take 5000+5000 loan.

What is the further steps. Some one was saying that We will have to pay the 5% tax if the loan exceeds 5000? Is it correct?. What if i replay 50% loan by the end of tax year. Is it ok to give loan to wife?

Please help me.

Regards
Goodmans

The plain answer is that yourCo can loan you any money you want but if it is not at a commercial rate then the interest that you are not paying would be treated as a benefit in kind.

Try searching the forum for "Directors Loan" and see what you can find. You can overdraw the Directors Loan account without paying interest but there are conditions attached and if you fall foul of them it can get very expensive.

hth

[Lewis]

Hi there,

Me(Director) and my wife(secretary) want to take 5000+5000 loan.

What is the further steps. Some one was saying that We will have to pay the 5% tax if the loan exceeds 5000? Is it correct?. What if i replay 50% loan by the end of tax year. Is it ok to give loan to wife?

Please help me.

Regards
Goodmans

Your wife cannot have a directors loan if she is not a director.

[w3bdEw]

Just wondering. If money is there can you not take it as dividend?

Got these two excellent posts from past:
http://forums.contractoruk.com/accou...n-account.html
http://forums.contractoruk.com/accou...-loan-how.html

[DaveB]

Only a Director, not the Co. Sec, can make use of the Directors Loan Account.

Legally it should not exceed £5000 but since it needs a complaint from shareholders to initiate any action in pratical terms that never happens.

Any money loaned in this way may be interest free but it must be paid back within 9 months of Co. Year end i.e. before co. accounts are due. If it is not paid back within this period it is then treated as personal income and subject to tax at 25% IIRC.

Overall it's really not worth the hassle unless you have no other option. If the money for the loan is in the co. then take it as a dividend if you really need it.

If you don't have the profits to pay it out as a dividend taking it out of money set aside for VAT or CT is a *very* bad idea. Should you fail to repay it in time for any reason not only will you be landed with a personal tax bill your company will also be in default on it's own tax liabilities, this is not a good thing.