Lending Company Money

[Jass T]

Looking to put some money into my company as a directors loan. This will be used to pay off a bank loan the company was paying 9.5% interest on.
Can I charge the company a similar amount or more..?
Is there any general guidance how much your allowed to charge..?

 

[DontAsk]

Do you understand the tax implications of charging interest?

 

[Jass T]

Do you understand the tax implications of charging interest?

Well I know its treated as income and I have to pay income tax on it. Are there others..?

 

[ThatDevAaron]

im curious to know the answer to this too!

 

[Brew Bear]

Our first post! Hello.

Firstly, please seek professional advice form an accountant or tax adviser.

My current business owes me a significant sum and has done for some time. Any interest charged attracts an immediately payable tax to HMRC,(possibly every quarter) 20% and you need to file CT61. You report this on your self assessment accordingly.

The amount of interest you charge needs to be appropriate. In effect you could charge a similar to a loan available to you. This is something you need to consider for your own personal circumstances.

NB - if the loan you currently have is killing cashflow, and you are seeking to alleviate this by loaning your own money, consider the fact if your business does not have the potential to repay the loan, that that money maybe lost.

 

[Jass T]

So do you still have to pay tax on the money received through self assessment after the company as deducted the 20% to pay HMRC..?

 

[Brew Bear]

So do you still have to pay tax on the money received through self assessment after the company as deducted the 20% to pay HMRC..?

No, the tax paid needs to be included in your self assessment by you or whoever does your self assessment.

You declare the interest as income. You record the tax paid and the difference is settled accordingly.

I highly recommend anyone reading this to seek professional advice.