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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I have a limited company that I have funded failed ideas

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I have a limited company that I have funded failed ideas using money from my parents or my own funds. The money was entered on the balance sheets as a directors loan even though my parents are not directors. Things have started to turn around where it looks like I will have a cash surplus. If I transfer money from the company to myself or my parents will we be liable to declare receiving this money even thought it’s just returning money that was loaned to the business? Would we be taxed for receiving it even though it really isn’t income it’s a loan being repaid?

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

Loans to the company and their subsequent repayment are outside the scope of UK taxation unless interest is paid. The interest might create a taxable liability, but the first 2K of any interest per person is not subject to tax anyway.

Customer: replied 1 year ago.
There has been no interest paid. So Even though my parents are not directors but did give me the money to put into the company and there is no written contracts or anything. When I make a repayment directly back to them from the company bank account they do not have to declare this as income? (Which it is obviously not)

Certainly not, emulate Brer Fox, 'For he law low and say nuffin!'

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