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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am filling in my company tax return -15. In that

Customer Question

I am filling in my company tax return for 2014-15. In that year I took out a bank loan for £10,000 repayable over 2 years. How do I show the loan, the repayments and the interest in my tax return? I assume that the loan itself is not taxable, and that the interest is tax deductible but the repayments are not.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You are correct in your assumptions. The loan is a creditor over one year in your balance sheet on the CT600 and the interest is allowable against Corporation Tax. You merely include the interest as part of the calculation for Box 3 of the short veraion of the return. Exactly the same principle is used if you have to use the long version of the CT600. I do hope that my reply has been of assistance.
Customer: replied 2 years ago.

So neither the original loan nor any of its repayments (except for the interest) need appear in the company tax return?

The reason that I ask is that on my form CT600 there is a box AC28 with the label "Interest receivable and similar income:" and the help text mentions "bank loans or deposits", yet there is no equivalent box for the repayments.

I had thought that maybe the £10,000 loan should appear somewhere as taxable income and the repayments as deductible expenses, but you are saying that these should not appear at all. Is that correct?

Expert:  bigduckontax replied 2 years ago.
That is for interest your company receives, if any, from banks, building societies or other deposit takers. The interest paid is netted out in this entry. Here is the guidance from the CT600 notes: 'Combine all the company's non­trading credits and debits into a single figure of profit or deficit. ' A loan to a company is not income, but is merely posted as a creditor in the balance sheet. When repaid the creditors merely reduce. The interest the company pays is allowable against Corporation Tax liability and, for the CT600, merely included in the expenses incurred. I know this seems utter lunacy, but that is how it works. I never cease to be amazed by the crass stupidity in the way the on line CT600 was designed. In the old paper days I was hard pushed if it took 5 minutes to complete. With the on line version it takes at least half an hour as the accounts require reconstructing in a manner totally removed from normal accounting principles; sigh.
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Expert:  bigduckontax replied 2 years ago.

Thank you for your excellent support.

Good luck with the on line CT600! I have seen the advice from another highly regarded expert on Just Answer which was to fudge it!