Limited Company Question

emma1801
emma1801 Feels At HomeRegistered Posts: 55
Hi All

If a Limited company was to receive a loan from the Directors wife (she is not a Director of the company) Can she charge interest on the loan? And would she need to declare the interest received on a self assessment? Your thoughts please.

Comments

  • burg
    burg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Yes can loan and charge interest but it must be declared as income. I think the company must also deduct tax at source and pay to HMRC.
    Regards,

    Burg
  • MarieNoelle
    MarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,433
    I think because she is the spouse of a director it will be considered as a loan from the director which carry specific rules:

    from HMRC Website [h=3]"Directors' loan accounts in credit[/h] If your company pays you interest on your director's loan, there are Income Tax implications for you and your company.
    You must show the interest you've received as income on your Income Tax Self Assessment tax return.
    Your company must pay this interest to you only after withholding Income Tax at the basic rate - currently 20 per cent.
    Your company must disclose these interest payments it has made to you and pay the Income Tax that it has collected to HMRC. You should use form CT61 to do this. You can order form CT61 online."

    Hope this helps

    MN

  • emma1801
    emma1801 Feels At Home Registered Posts: 55
    Thank you for responses.
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