Business Man
6th October 2009, 09:39
Can loans be made to a director by the company during the year and then be converted to salary drawing after the year end ?
David Griffiths
6th October 2009, 12:02
They can, but there will be a taxable benefit in kind if the loans exceed £5000 at any time.
There will also be an extra corporation tax charge of 25% of the loan if it's not repaid within nine months of the year end. That's eventually repayable when the loans are repaid.
And if the amount is an advance of salary, it might be caught by PAYE anyway
Best avoided, in my opinion