Directors Loans entry

[humble_pie]

My Company's financial year finished on 30th of November 2018. I had £20K director's loan outstanding(all of this amount was taken out during last financial year of the company), which I have paid back into company accounts today. So its within 9 months of accounting period, since my accounts are due on 31 Aug 2019.

As per HMRC rules, I don't any tax since this amount has been settled in 9 months. On my balance sheet I showed this amount as Debtors amount falling. MY question is, where else I need to mention that I took this loan. I am a micro entity company, so usually all I have to submit is a balance sheet. As I understand CT600 is not mandatory for Micro-entity companies.

[robbob]

There should notes - section 6 of the linked document is a decent starting point for some advise on what notes should say.

https://www.frc.org.uk/getattachment/fb775a35-08b0-41ad-b164-ff0414a61e33/FRS-105-WEB-READY-2015.pdf

Note although there is no charge to s455 tax there is a taxable benefit charge on you as the individual unless you repay interest at the official rate - this should be reported on form p11d - calcs based on tax years so reporting deadline was 6th July.

finally note there are linked loan rules so there could be issues if its a recurring theme that you are taking loans from the company soon after repaying other loans.

[humble_pie]

There should notes - section 6 of the linked document is a decent starting point for some advise on what notes should say.

https://www.frc.org.uk/getattachment/fb775a35-08b0-41ad-b164-ff0414a61e33/FRS-105-WEB-READY-2015.pdf

Note although there is no charge to s455 tax there is a taxable benefit charge on you as the individual unless you repay interest at the official rate - this should be reported on form p11d - calcs based on tax years so reporting deadline was 6th July.

finally note there are linked loan rules so there could be issues if its a recurring theme that you are taking loans from the company soon after repaying other loans.

Repay the interest on official rate ? I don't really understand that point..

On your second point on loan rules, I been trading for 5 years, this was first time I took out the loan, so its not a recurring theme.

[robbob]

Repay the interest on official rate ? I don't really understand that point..

The default is you declare taxable benefit based on value of loan (presuming over 10k) - however you can reduce the benefit charge if you pay back the company at the official interest rate,

https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees

On your second point on loan rules, I been trading for 5 years, this was first time I took out the loan, so its not a recurring theme.

That's fine as long as there are also no similar loans in the near future too! - so a second loan soon after the first one has been repaid would affect the treatment of the first loan !

[humble_pie]

Repay the interest on official rate ? I don't really understand that point..

The default is you declare taxable benefit based on value of loan (presuming over 10k) - however you can reduce the benefit charge if you pay back the company at the official interest rate,

https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees

On your second point on loan rules, I been trading for 5 years, this was first time I took out the loan, so its not a recurring theme.

That's fine as long as there are also no similar loans in the near future too! - so a second loan soon after the first one has been repaid would affect the treatment of the first loan !

Ok, according to HMRC the official interest rate is 2.50%, so it means I have to pay 2.50 interest on top of original loan amount ? I didn't submit a P11D yet either.

No I won't take another loan again, its just too much hassel.

[humble_pie]

Thank you for reply.



I think I have more clarity now, Basically if I pay the loan back to the company with interest rate HMRC has set out, 2.5% then I won't have to submit the P11D...
But then I will have to pay CT on the interest earned by the company in future payments ?