Employee loans

[PIGDOG]

Can someone give me some advise on employee loans? Are there any rules/guidelines that apply when loaning money to employees?
Cheers

 

Yes, there are rules and it would largely depend on what the loan is for, is it a loan for training costs/beneficial/hardship. Depending on why you wish to make the loan and the amount may require involvement with HMRC you would be best speaking with your accountant in that respect.
You would need a clear agreement on the loan dont try to incorporate it into the contract but have a seperate agreement.
The right to deduct monies from the employee's salary or final payments must contain the following provisions:
1 The employee must have signified in writing his agreement to the making of such deductions; and
2 There must be a clear statement that the deduction is to be made from the employee's wages; and
3 The employee's agreement must relate to the deduction being made from that source.

Answer is unfortunately a little vague, but in the absence of more detailed information.....

http://www.hmrc.gov.uk/employers/ebik/ebik2/loans-02.htm
http://www.businesslink.gov.uk/bdot...RCES&itemId=1073790572&r.l2=1073859224&r.s=sc

 

[elaine@cheapaccounting]

Is the employee also a director?

 

[PIGDOG]

Yes it is a Director

 

[elaine@cheapaccounting]

Then different rules apply. Check out this thread:

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=26094