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Free Guides for new and growing businesses from HRBS - fixed fee accountants and business advisors

Loans to directors

loans to directors Loans to directorsThe 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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Thinking of starting a business?

hrbs.biz guide to starting a business Thinking of starting a business?If you are turning a hobby into a business or starting a whole new venture, here are some tips to help you get up and running without falling foul of the (UK) tax authorities.

Bear in mind that your self employment income will be added on to your income from all other sources when calculating your tax bill. If your self employment costs are less than £1,000 you can claim the £1,000 trading allowance. Further information is on the HMRC website.

However, if you make losses you can offset those against your other income for the tax year, thereby potentially getting a tax refund.

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Planning for your self assessment tax bill

hrbs.biz guide to paying your self assessment tax bill Planning for your self assessment tax billThe UK income tax year is 6 April to the following 5 April and so the tax year 2018/19 ran from 6 April 2018 to 5 April 2019.

You will need to complete a self assessment tax return if you are self employed, have untaxed income (eg rent, dividends), or if you, or your partner, have an individual income of more than £50,000 and one of you gets Child Benefit or contributions towards the upkeep of a child. Limited company directors are often required to submit a tax return.

A self employed person will pay both income tax and class 4 national insurance (NI) on their profits, the fixed rate of class 2 NIC plus income tax on any other income and capital gains tax on any relevant capital gains in the tax year.

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