Intrest on loan to company

[mike-tibss]

afternoon,

At present I'm the director and the only employee of limited company I'm paying myself a weekly salary below the Lower earnings limit, primary Class 1 a total of £5304 a year my tax allowance is £7475 can I charge my company intrest on the money I lent it as cash flow and claim the tax back?

Hopefully that makes sense

Regards

Mike

[pawncob]

How would you claim the tax back? What money did you lend the company?
You can charge a market rate of interest for funds lent to the company, but you'll end up paying tax on it if you exceed the £7475 p.a.

[pjclar02]

Yes - in theory.

If you pay interest on your director loan, the company will have to withhold 20% tax and pay this over to HMRC (and submit form CT61). You will receive the interest free of income tax for the first £2,171 to take you up to the personal allowance - so yes in theory you can then claim the 20% tax paid at source back....

However, it might be more straightforward just to increase your salary up to the secondary threshold of £7,072 per year. Thus there would be no tax or NI on the salary.

Hopefully I have understood what you are trying to achieve.....