I need help with.....

Can I take a loan from the company

There are specific rules in connection with loans taken from the company but it does also depend on whether you have an existing loan account between you and the company already.

Existing loan account where money is owed to you:  as long as you pay any loans from the available amount there are no consequences with the level of payment made

No existing loan account or it's overdrawn:  taking a loan from the company is allowable up to a balance of £5,000 per year.  If you take out more than this, tax is potentially due on the difference (25%).  

Furthermore, unless interest is payable by you on the loan it will also be treated as a benefit in kind payment.  Benefit in kind is taxable as a personal tax liability plus the company is charged national insurance.

There are further consequences of having an overdrawn account.  If the directors loan account exceeds £5,000 at the year end you will have 9 months to pay the balance back.  If the balance is not paid back then tax at 25% will be charged on the balance.  However, this tax is repayable once the balance is repaid back.

I need help with ...


Have more questions? Submit a request


Powered by Zendesk