i want to have a company loan for 60k,(im a directer with full control ), but i dont want to pay for 3 years once the csa are off my case what will be the tax implicationandy
System of Law: England-and-Wales
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Hi.What don't you want to pay for three years?
sorry i dont want to pay it back for 3 years ?
Thanks.As a director if you have an overdrawn director's loan account, the company will have to pay a Section 419 tax charge of 25% of the outstanding balance at the year end in which you go overdrawn. If the overdrawn balance is £60,000 then you will have to pay £15,000 in Section 419 tax. That will be due for payment nine months after the company's year end. If the loan is reduced in part or repaid in full, some or all of the Section 419 tax can be reclaimed. Take a look here for information on overdrawn director's loan account.As a director, you will have to pay tax on the benefit of having the loan. If the loan balance remains the same for three years, the benefit will be £2,400 per tax year. Take a look here for more information on beneficial loans. The rate of interest used is 4% but this can change in line with general interest rates.Let me know if you have any further queries.
ok so the company will be taxed 15k (is that each year the loan is outstanding ? )i will have to pay £2400.00 at the 4% unless it changes if then in the 3rd year i take a large dividend ( i know i will be taxed on this, but i can not earn to much till then as the csa will want more from me and i think £300 per month is enough at the moment )and pay the loan back, the company can then claim the 25% tax back that has been paid on the loan ? have i understood this correctly ?
You seem to have got the hang of it.The company will pay a one off Section 419 charge of £15,000. If the loan increases, there will be a further charge on the increase.If the dividend is used to clear the loan, then the company will be able to reclaim the Section 419 tax but you cannot make the claim until nine months after the end of the accounting period in which it is repaid.TonyTax41076.5012564468
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