Can I loan my company money?

[jimcanswim]

Hi all,

I know you can put a cash injection into a ltd company, but can you loan it money and charge interest?

Thanks for any advice.

 

[MyAccountantOnline]

Hi all,

I know you can put a cash injection into a ltd company, but can you loan it money and charge interest?

Thanks for any advice.

Yes and yes - it's called a directors loan (assuming you are a director)

 

[dimitri1]

Hello

The company will have to deduct 20% from the interest and pay it over to the Revenue on a quarterly basis. This tax will be offset against the company's corporation tax bill eventually.

In addition is taxable income for the director/shareholder assessed for income tax. However, there is no National insurance on the income (unlike salaries).

Furthermore, if the director/shareholder has borrowed himself the money, he will be entitled to loan interest relief on his loan, provided that the loan is used to make a loan to his company or to purchase shares in it.

In the event that the company cannot repay the loan, the individual may be able to claim relief for the loss as a capital loss.

Please note that the above are only general guidance as there are many strings and conditions (tax is a very complicated and grey affair!) as to what (e.g. type of finance), when (term of the loan) and by whom (e.g. status in company) certain things can be done.

Constantine Savva, TAXADVICEUK Chartered Certified Accountants
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[Williams lester]

Bear in mind that the income will be taxable on you personally.

 

[Truemanbrown]

Remember when the interest is paid back to you, the company should deduct at the basic rate from the interest payment.

This tax is then paid over by the company on a quarterly basis using the Form CT61(Z) which you should obtain from the the Inland Revenue.

The interest paid over to yourself is then included on your personal tax return.

 

[Mr D]

Anything more than a £100 passport you can offer as collateral?

 

[Imperialandservices]

I really would like to offer something else but i dont have anything. Im 30 years old, trying to start leaving. My bank doesnt want to offer me anything as im only traiding for 4 month. I can show my bank statements that i have good income but on this stage what im getting im paying back as wages and for tools and equipment. I spent all my savings to start this company. please tell me what can i do to get this loan. im happy to pay any interest you like. i can afford about £2000 a month to pay back.and after few month even more than that

 

[Mr D]

Was looking to see if there was any company or group that could offer money with sufficient collateral
Without something of quite a bit greater worth than what you are asking for you will struggle to get a loan.

Have you looked into getting an investor? Someone willing to buy a percentage of the business for an agreed sum?

 

[Imperialandservices]

Im trying to start my own business and dont want to sell anything yet. So dont have anything to offer on this stage