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bigduckontax, Accountant
Category: Tax
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I have a small company and have earned 75000 trying to work

Customer Question

I have a small company and have earned 75000 trying to work out if it is better to lake 15000 as a loan from the company and then repay next year. or take the hit on the tax incase the rates rise.
Submitted: 8 months ago.
Category: Tax
Customer: replied 8 months ago.
I meant that i have received 75000 in dividends 8080 in paye and wondering what is the best option and possible costs of keeping the loan in the company for a couple of years
Expert:  bigduckontax replied 8 months ago.

Hello, I am Keith, one of the experts to Just Answer, and pleased to be able to help you with your question.

Provided that the loan is repaid within nine months of the end of the company's accounting year the horrendous tax consequences thereof are avoided. Does this resolve your difficulty?

I do hope that you have found my reply of assistance.

Customer: replied 8 months ago.
Thanks yes i was actually looking at the tax implications if i kept on for a year i understand it will cost nothing if kept under 9 months but I am already up to £40000 dividends this year. so as i will have to pay back the loan from my personal account i will need to take more money out. How much does it cost to roll the loan on by another year?
Expert:  bigduckontax replied 8 months ago.

What is the amount of the loan you envisage?

Customer: replied 8 months ago.
Looking at 15000
Expert:  bigduckontax replied 8 months ago.

Here is the guidance from the Gov UK Web SIte:

'If you’re a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 to 2014) at any time in the year, your company must:

You must report the loan on your personal Self Assessment tax return. You may have to pay tax on the loan at the official rate of interest.'

You do realise that if you take dividends that these do not relieve the Corporation Tax (CT) liability and that dividends over 5K are taxed at your marginal rate of Income Tax (IT). The company will be taxed as you will be; double taxation.

I am so sorry to have to rain on your parade.