Can I lend money to my company and charge interest? Does the company have to deduct tax and pay interest net? Can the company pay me interest gross? What if I have borrowed the money to lend to my company?
This is a freeview 'At a glance' guide.
At a glance
- When a director or other individual makes a loan to their company, they may charge it interest.
- Providing interest is not excessive and is paid within a certain timeframe the company will also obtain Corporation Tax relief on interest paid to the director as a deduction from its profits.
- Where the loan term lasts for longer than a year the company must deduct tax at the basic rate and make payments of interest net of tax.
- Where you have borrowed the money to lend to the company you may be entitled to relief for the interest you pay on that loan.
- When the company pays you interest it must deduct tax at the basic rate and make a return to HMRC using form CT61.
See Interest: Paid to directors and individuals and Interest relief: Making a loan to a close company