Company loans to directors
With effect from 6th April 2014 the amount that a director can borrow from their company has doubled from £5,000 to £10,000. Such a loan may be borrowed interest free or at a low rate without a tax or National Insurance charge being incurred.
This is a particularly useful source of low cost finance. The term cannot be indefinite although as long as the amount borrowed is under £10,000 a tax charge should not arise irrespective of whether the loan is paid off or not. Many companies have such loans showing on their balance sheets for many years, without tax or National Insurance liabilities arising.
If the company writes off the loan, however, then the amount written off becomes a benefit in kind and is subject to tax and National Insurance.
It should also be borne in mind that if the amount of the loan, including accrued interest, if applicable, exceeds £10,000 then the entire loan becomes subject to tax and National Insurance by the borrower – not just the balance above £10,000.
Loans to spouses or children are aggregated to test whether the £10,000 limit is exceeded. There are also additional potential tax charges where the director borrowing the money is also a company shareholder.
This article was created by --Martinc 18:44, 25 April 2014 (BST)
[edit] Find out more
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
What it is and how to use it.
Investors in People: CIOB achieves gold
Reflecting a commitment to employees and members.
Scratching beneath the surface; a guide to selection.
ECA 2024 Apprentice of the Year Award
Entries open for submission until May 31.
UK gov apprenticeship funding from April 2024
Brief summary the policy paper updated in March.
For the World Autism Awareness Month of April.
70+ experts appointed to public sector fire safety framework
The Fire Safety (FS2) Framework from LHC Procurement.
Project and programme management codes of practice
CIOB publications for built environment professionals.
The ECA Industry Awards 2024 now open !
Recognising the best in the electrotechnical industry.
Sustainable development concepts decade by decade.
The regenerative structural engineer
A call for design that will repair the natural world.
Buildings that mimic the restorative aspects found in nature.
CIAT publishes Principal Designer Competency Framework
For those considering applying for registration as a PD.
BSRIA Building Reg's guidance: The second staircase
An overview focusing on aspects which most affect the building services industry.
Design codes and pattern books
Harmonious proportions and golden sections.
Introducing or next Guest Editor Arun Baybars
Practising architect and design panel review member.