Director’s Loan

[coolguycp1]

I am looking to take out a director’s loan of £10,000 from my Ltd. Company next week for my personal use. My company’s current financial year runs till Oct 14.

Am I right in assuming that I have time till 9 months from October 14, i.e, July 15 to repay the director’s loan without the company incurring any corporation tax charge S455? What are the requirements for record keeping for taking out such a loan?

And finally, are there any personal tax implications of an overdrawn director’s loan account for the full £10,000 if unpaid till July 15?

[Martin at NixonWilliams]

I am looking to take out a director’s loan of £10,000 from my Ltd. Company next week for my personal use. My company’s current financial year runs till Oct 14.

Am I right in assuming that I have time till 9 months from October 14, i.e, July 15 to repay the director’s loan without the company incurring any corporation tax charge S455? What are the requirements for record keeping for taking out such a loan?

And finally, are there any personal tax implications of an overdrawn director’s loan account for the full £10,000 if unpaid till July 15?

You are correct in saying that you will have until July 2015 to repay the loan.

There are no implications of having the loan providing it does not exceed £10,000.

I hope this helps.

Martin

[northernladuk]

https://www.google.co.uk/search?q=di...sm=93&ie=UTF-8

Why do you think personal tax is an issue here? It's a loan from your business to you. It's not income.

It's 9 months from the current year end.

If you have an accountant I would suggest you go over it with him. It sounds like you are pushing the upper edge with the amount and the exact timescales so make sure you dotted the i's with him. The directors loan account is useful for cleaning up any issues at year end to save tax and deal with carry overs. Be aware that facility won't be available if you do this.

Also be aware of bed and breakfasting. Paying it back and taking it back out in less than 30 days isn't going to work. Even past the 30 days may attract unwanted attention, particularly if you make a habit of this over a long period.

[Clare@InTouch]

As NLUK indicates above, you do need to be cautious. The £10,000 limit is for all loans to you, so if you take £10,000 and then accidentally overpay your wages or expenses by £1 then all of a sudden you're over the limit and it's a benefit in kind.

[coolguycp1]

Thanks for your replies.

It's more a one-off loan that I intend to pay back within the maximum allowable time period without incurring any corporation tax or any Benefit in Kind (hence the amount of £10,000 and the timeframe).

As I normally keep on top of my other tax liabilities (i.e., Self Assessment, corporation tax, VAT etc.), and make provisions to pay them accordingly, I do not anticipate any issues in paying the loan back in the intended timeframe.

If I keep to the £10000 limit and the timeframe, what records do I have to maintain?