Home For accounting professionals General accounting discussion
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚


£5000 loan to company director

clearaccounting100clearaccounting100 Feels At HomeRegistered Posts: 49
Hi i think i am right in thinking that a company director can have a loan from their company upto £5000 without incurring NIC or Tax on the benefit? Can anyone please confirm whether i am right. Also if they did take the loan it would be shown under the bottom half of the companies balance sheet as directors current account and not under debtors in the top half. Any help much appreciated. Many thanks Linda :)

Comments

  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    It is tax and NI free in terms of beneficial loan rules.

    There will be S.419 tax if the loan was still outstanding 9 months after the year end.

    There will be NI if the loan is waived rather than repaid.

    It should be included in debtors and a corresponding note will be required to explain the terms of the loan.
  • clearaccounting100clearaccounting100 Feels At Home Registered Posts: 49
    thanks Dean, the loan is to be repaid and not waived. What is the s.149 tax please? :)
  • clearaccounting100clearaccounting100 Feels At Home Registered Posts: 49
    Just found website on S.419 tax, just to clarify if the loan is outstanding at the end of company accounts show are shown on the debtors in company accounts. but is paid off 6 months after end of the period, then the company does not have to pay the S.419 tax? but has to include an explanatory note in the accounts when submitting a copy of the accounts, tax return and computation to HMRC? Have i got the jist of it right please?

    Many thanks
    Linda :)
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Yep, that's right.

    Still need to do supplementary pages of CT600 confirming when the loan was repaid.
Sign In or Register to comment.