I have a director who wants to charge interest on the amount he has loaned the company. I know form CT61 needs to be completed. The company is paying £6000 gross interest, of which £1200 income tax will be deducted. How should this be shown in the accounts? As the company owes the £1200 income tax, should this be shown as £6000 interest paid, £1200 other taxes (current liabilities <1 year), and £4800 to his directors loan account? (edited - sorry got the figures the wrong way around before!) Or is there some other way to show this? I only have a few limited companies and have never bothered with charging interest on directors loans before, but this guy is insistent on doing so. Any help would be appreciated.
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The interest the company is paying is £6,000, so that is the debit entry that goes to its P&L account. Surely you can work out what the credit entries are, and where to post them.