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
Government consultations for the summer of 2025
A year of Labour, past and present consultations on the environment, the built environment, training and tax.
CMA competitiveness probe of major housing developers
100 million affordable housing contributions committed with further consultation published.
Homes England supports Greencore Homes
42 new build affordable sustainable homes in Oxfordshire.
Zero carbon social housing: unlocking brownfield potential
Seven ZEDpod strategies for brownfield housing success.
CIOB report; a blueprint for SDGs and the built environment
Pairing the Sustainable Development Goals with projects.
Types, tests, standards and fires relating to external cladding
Brief descriptions with an extensive list of fires for review.
Latest Build UK Building Safety Regime explainer published
Key elements in one short, now updated document.
UKGBC launch the UK Climate Resilience Roadmap
First guidance of its kind on direct climate impacts for the built environment and how it can adapt.
CLC Health, Safety and Wellbeing Strategy 2025
Launched by the Minister for Industry to look at fatalities on site, improving mental health and other issues.
One of the most impressive Victorian architects. Book review.
Common Assessment Standard now with building safety
New CAS update now includes mandatory building safety questions.
RTPI leader to become new CIOB Chief Executive Officer
Dr Victoria Hills MRTPI, FICE to take over after Caroline Gumble’s departure.
Social and affordable housing, a long term plan for delivery
The “Delivering a Decade of Renewal for Social and Affordable Housing” strategy sets out future path.
A change to adoptive architecture
Effects of global weather warming on architectural detailing, material choice and human interaction.
The proposed publicly owned and backed subsidiary of Homes England, to facilitate new homes.
How big is the problem and what can we do to mitigate the effects?
Overheating guidance and tools for building designers
A number of cool guides to help with the heat.
The UK's Modern Industrial Strategy: A 10 year plan
Previous consultation criticism, current key elements and general support with some persisting reservations.
Building Safety Regulator reforms
New roles, new staff and a new fast track service pave the way for a single construction regulator.