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Director's beneficial loan reporting requirements

If interest is paid at the HMRC official rate, is there still a P11D reporting requirement?

Hi. I know this is a topic that is done to death but the more I look into it the more confiused I get. If a director pays interest on their overdrawn loan account (>£10k) at the HMRC official rate and the interest is paid by 19 July, is it still necessary to report the loan on a P11D, albeit there is no Class 1A for the company? I have read that if sufficient interest has been paid, then the director has not received a beneficial loan, and so there is nothing to report, hence no P11D required. Thanks in advance for any help.

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26th Mar 2019 16:10

Broadly, if the rate of interest charged is at a higher rate or equal to the official rate, no report is required. There are a few other exemptions you might be interested in;
https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees/wha...

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to AlgernonB
28th Apr 2019 14:57

I think that interpretation is indeed broad. It certainly does not sit four square with the third bullet point in your linked reference, which is presumably HMRC's interpretation of the same rule.

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to Tax Dragon
28th Apr 2019 15:26

I agree.

The bullet point is a specific exemption, which would apply to a loan meeting the stipulated conditions, even if the interest paid is now less than that at the Official Rate.

It is separate from the general principle that if interest is paid at a rate higher than the Official Rate there is no benefit to the employee (even if the rate is less than that obtainable from another lender). Such a loan is not exempt, and doesn’t require exemption - it is quite simply not a beneficial loan.

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to Wilson Philips
28th Apr 2019 15:59

Indeed. We've somehow found ourselves looking at s177 when we haven't passed s175.

(And I need to retract my "same rule" comment, as that's simply wrong.)

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27th Apr 2019 13:57

Don't forget company tax liability if the director is a shareholder.

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