DIrectors Loan Under £10k

DIrectors Loan Under £10k

Didn't find your answer?

Do I need to state anywhere, I've as a benefit in kind or on ct return if the overdrawn directors loan is under the 10k threshold. Doesn't look as though the director will be able to clear this within the nine month period.

Dividends have been taken to maximum level from retained profit, so not much I can do there.

Any advice gratefully received

Thanks

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By stephenkendrew
28th Apr 2016 07:16

yes

You have to show the loan in the full accounts.

You have to show the loan in the abbreviated accounts.

The section 455 tax on the loan has to be shown on the company's corporation tax return.

A claim to reduce (some or all of) this tax can be made on the return if (some or all of) the loan is repaid within 9 months of the year-end. 

Interest on the loans (with P11D implications) becomes an issue if the loan was, at any time during the year, above £10,000.  

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By cfield
28th Apr 2016 08:34

Salary/dividend

Don't forget the director can clear his loan with salary or dividend (or even expenses) within the following 9 months, even if he takes these items in cash. The cash would simply be treated as a new loan. So long as the clearing item is taxable, this is allowed.

For a loan of less than £10k, this doesn't sound too difficult to achieve.

Remember though that if the loan exceeded £10k at any point during the tax year (for more than one complete loan period) it must be treated as a beneficial loan for the whole tax year, not just the period it exceeded the £10k. This would mean a P11D or payment of interest at the official rate (currently 3%) by 19 July.

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