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

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