Loans to directors
The good news … a company can loan a director up to £10,000 without shareholder approval.
The bad news … HMRC consider interest free loans to directors as benefits in kind.
Where the loan (or total if more than one loan) is over £10,000 the benefit (interest), calculated at the HMRC official interest rate (currently 2.5% pa) is taxable and must be reported on form P11d by 6th July and included in the director’s personal tax return.
If the director pays the company interest (minimum 2.5% pa), there is no benefit in kind.
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