Limited Company Question

emma1801emma1801 Feels At HomePosts: 54Registered
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

  • burgburg Experienced Mentor GloucesterPosts: 1,440Moderator, FMAAT, AAT Licensed Accountant
    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
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderPosts: 1,462Moderator, MAAT, AAT Licensed Accountant
    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

  • emma1801emma1801 Feels At Home Posts: 54Registered
    Thank you for responses.
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