Inland Revenue does not want participators in a company to receive “tax-free” loans instead of taxable salaries or dividends. If a loan is made and not repaid to the company within nine months of the end of that accounting period, the company must pay 25% of the loan amount to Inland Revenue (ICTA88/S419) as further tax.
In addition, any loan in excess of £5,000 made to a director or an employee is also a benefit in kind unless the recipient pays the official rate of interest on the loan. The benefit will be taxed in the participator’s personal capacity.
For more information please contact us on 0208 241 3495 or info@sailsolutions.co.uk
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