Directors Loans
A director’s loan is when you (or other close family members) receive money from your company that is not:
- A salary, dividend or expense repayment
- Money you’ve previously paid into or lent to the company
If you have an overdrawn director’s loan account, then you owe the company money. Once the accounting period has finished, you have nine months to repay the loan. Failure to repay the loan will result in the company incurring a substantial corporation tax penalty on the loan. You may have to pay additional tax if you have not repaid an overdrawn loan within 9 months
of the company’s accounting year end date. Your company may also have to pay tax if you’re a shareholder (sometimes called a ‘participator’) as well as a director.
Your personal and company tax responsibilities depend on whether the director’s loan account is:
- Overdrawn – you owe the company
- In credit – the company owes you
We will make sure you understand the implications for you regarding your director’s loan before you make a decision to commence winding up your company.
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Client Story
We had never heard of a CVA and had concluded that the only solution was cessation of trade. The Business Debt Advisor talked us through all the possible solutions and we were quite simply amazed that creditors would accept less than payment in full. The initial period of trading after the CVA was approved was initially tough as certain creditors would only trade on a pro-forma basis but once they realised the business was not going to fold, we were able to trade on normal credit terms. The team at The Business Debt Advisor were extremely professional and we are delighted with the outcome especially as they kept their costs to a minimum.