£5000 loan to company director

clearaccounting100

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

deanshepherd

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.

clearaccounting100

thanks Dean, the loan is to be repaid and not waived. What is the s.149 tax please?

clearaccounting100

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

deanshepherd

Yep, that's right.

Still need to do supplementary pages of CT600 confirming when the loan was repaid.