director loan

[Joop123]

Hi everyone,
Hopefully just a quick easy answer to all those ITK.
My sister has a limited company and put in £30k as directors loan to get it off the ground. The company hopes to make an operating profit before tax of roughly £50k.
She has a pension so doesnt take a salary as the pension is taxable.My question is does the company pay corporation tax on the £50k (£10k) first and then she can start taking whats owed to her from the remaining £40k.
Or can she start to draw from the £50k and reduce her cp liability ?
sorry if its a dumb question....she has an accountant who she will be seeing nearer the end of the year.
cheers
joop

 

[MyAccountantOnline]

Hi everyone,
Hopefully just a quick easy answer to all those ITK.
My sister has a limited company and put in £30k as directors loan to get it off the ground. The company hopes to make an operating profit before tax of roughly £50k.
She has a pension so doesnt take a salary as the pension is taxable.My question is does the company pay corporation tax on the £50k (£10k) first and then she can start taking whats owed to her from the remaining £40k.
Or can she start to draw from the £50k and reduce her cp liability ?
sorry if its a dumb question....she has an accountant who she will be seeing nearer the end of the year.
cheers
joop

The company will pay tax on its profits ie sales/income less allowable business expenses ie the £50k

She can take loan repayments as and when the company has sufficient cash to fund the repayments.

 

[Tom McClelland]

Repayment of a loan doesn't affect profits, so she can start drawing down the repayment out of the post-tax profit.

The way to look at it: They didn't pay corporation tax when they put the loan in, so they don't get corporation tax relief when it is repaid.

 

[Joop123]

many than ks guys....Tom the sentence sheds light on it

joop