Company rescue solutions
A director’s loan is when you (or other close family members) get money from your company that is not:
- a salary, dividend or expense repayment
- money you’ve previously paid into or loaned 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 do so results in the limited company incurring a substantial corporation tax penalty on the loan.
You may have to pay tax on director’s loans. 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
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