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s455 Directors loans

For Directors' loans of below £5,000 do I have to apply the 32.5% CT deduction and how do I do it?

So on the gov.uk website it suggests that you only have additional tax responsibilities if the loan is in excess of £10,000; however, on other site there doesn't appear to be this de minimis rule. Can any one help me decipher this and understand whether I need to deduct 32.5% CT off directors loan balances if they are for less than £10,000? 

I understand that if the loan is in excess of £10K and it's interest free then it's a beneficial loan and there are income tax and NI implications.

Thanks

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21st Oct 2017 18:05

If you are asking about s455, there is no de minimis.

And you don’t “deduct off” 32.5% of the loans. The company pays over to HMRC 32.5% of the amount by which loans have increased in the year.

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21st Oct 2017 18:18

ok thanks John. So even if the loan is £100, there is a repayable CT tax charge of £32.50 and only BIK charge to the director should the loan exceed £10K (if no interest).

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to Polly Lee
21st Oct 2017 19:40

S455 refers to the position at the company year-end and is a corporation tax issue. BIK relates to a loan in excess of £10k at any point in the tax year , i.e. 06/04-05/04 for which there would be a P11db reported as part of the PAYE system

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21st Oct 2017 18:24

You need to re-read the advice.

It says you need to declare the loan on CT600A and then goes on to say that there may be additional tax liabilities if the loan is over £10000.

It's not the world's greatest piece of prose, I agree.

I see it as lending the Government 32½% of what the company lends the directors. Subject to repaying within 9 months and matching rules etc.

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22nd Oct 2017 23:30

The 10,000pound de minimis is for benefits in kind and has NOTHING to do with s455. There is no de minimis for s455 so if the loan is outstanding more more than 9 months and 1 day after the end of the CAP then there is a s455 iability regardless of the amount of the loan

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By aidious
to Paulsoper
23rd Oct 2017 12:53

If the director works full time for the company and does not own > 5% then there IS a deminimis - £15k

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By Ruddles
to Paulsoper
25th Oct 2017 23:41

Factually, if the loan is outstanding more than 9 months and 1 day after the end of the CTAP, s455 tax will indeed be due. But it will also be due if the loan is outstanding more than 9 months after the end of the CTAP - it needs to be cleared BEFORE the due date for payment of the CT for the period in question. I've seen a number of companies caught out by this.

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25th Oct 2017 23:15

How often does that happen? Owning less than 5% AND receiving a loan? It will happen occasionally but is very rare - 99% of these situations arise with a very small number of directors who own significant shareholdings... but as ever it is important to dot all of the 'i's and cross all of the t's...

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