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
Are you enjoying our content?
Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.
Register with us now to receive our receive our FREE SME Topical Tax Update & newletter