What is a Directors Loan

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In the Know: What is a Director's Loan?

Last updated on Monday, March 17, 2014

Written by Churchill Knight

Back up plans can be a valuable thing. Take Director’s Loans for example. Useful when running a limited company and can act as a handy back up. Most contractors might never need to use it, however, if you decide you need to take out money from your business account that exceeds how much you have, the money is then treated as a loan to the company.

You won’t be surprised to find out that HMRC don’t take Directors Loans lightly.

You’ll need to pay interest on this loan if it exceeds £4,999 however, this is increasing to £9,999 from 6th April 2014.

Once you take out a director’s loan, you then have 9 months to pay back the extra cash and if not repaid within that time, you’ll need to pay a tax of 25% on the loan to HMRC.

To find out more about directors loan please read our updated article "What is a directors loan and how do I get one?"

 

 

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