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Post Info TOPIC: Directors loan
Kirst88


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Directors loan
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looking to see how this should be dealt with in the company tax return. a director gives the company £12000 when the company first starts up. First of all I know this £12000 isnt classed as income am i right? However each month the directors have been taking some of this money back how is this dealt with?



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kjmcculloch83


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To begin with CR Directors loan Account and DR Bank (if thats where the money went). Then each month DR Directors Loan and CR Bank.

Kris

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Shamus


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Hi,

just to add to Kris's post. If the directors have been charging interest on the loan then you need to complete a CT61.

Shaun.

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MarkS


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Hi Kirst

To you question there is no effect on the company tax return from the director loaning the company £12k and then taking it back.

Only effect would be if they took back more than they loaned the company and it wasnt repaid within 9 months of the year end there would be s419 (cant remember what the new section is called) tax to be paid by the company.  Effectively means the company makes a payment on account to HMRC for 25% of the overdrawn loan.  Will be able to get it back once the director repays the loan. 

Regards

MarkS



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Kirst88


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Is this OK then for the directors not to charge interest to the company?

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MarkS


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Yeah ok for directors not to charge interest on their loans.

In most cases i have seen in practice there is no interest charged.

Regards

MarkS



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
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