A director's loan

A director's loan is when you (or other close family members) get money from your company that is not:

You must keep a record of any money you borrow from or pay into the company - this record is usually known as a 'director's loan account'.

Include any money you owe the company or the company owes you on the 'balance sheet' in your annual accounts.

You may have to pay tax on director's loans. Your company may also have to pay tax if you're a shareholder (sometimes called a 'participator') as well as a director.

If you owe your company money then you or your company may have to pay tax.

Your personal and company tax responsibilities also depend on the way you pay off the loan. You also need to check if you have additional tax liabilities if:

Corporation tax - 32.5% or 25% if the loan was provided before April 6, 2016.

If the loan is "written off" or "released" (non-refundable). Then it is calculated minus the amount of the Class 1 National Insurance through the payroll of the company.

You must include the percentage on your personal self-assessment tax return. You may have to pay tax on the difference between the official rate and the rate you paid.

Your company may require a refund of corporation tax that it pays on a director loan that has been repaid, written off, or exempted. You cannot claim a refund of interest paid on corporation tax.

A post-compensation claim is 9 months and 1 day after the end of the income tax reporting period when the loan was repaid, written off or released. Until then, you will not be returned.

You must file a claim within 4 years (or 6 years if the loan was repaid on or before March 31, 2010).

Your company does not pay Corporation Tax on money you lend it.

You must report the income on a personal Self Assessment tax return.