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Hi again.If interest is credited to a director's loan account, the company must deduct tax at the basic rate of income tax (20%) as a bank would and account for that tax through it's annual CT600 corporation Tax return. Take a look here for more information.As far as the director is concerned, the interest will need to be disclosed in a self-assessment tax return for the tax year in which the interest is credited and is available for the director to draw if they complete personal tax returns. If the director does not complete tax returns but is a higher rate taxpayer, then they will need to register for self-assessment or call the tax office and ask for a form P810 annual review form to complete. Strictly, company directors should complete tax returns but HMRC seemed to have relaxed this rule in recent years despite what it says on its website. Take a look here for more information on tax return completion criteria and here for information on the tax point for interest.I hope this helps but let me know if you have any further questions.
If the interest is accrued/credited to the account when is it available to the director - when the accounts are approved?