Did you know that you can save tax with a company loan? If you borrow from your company you can be taxed on it as a ‘benefit in kind’. Relatively small loans are exempt from charges but charges apply when the balance owed exceeds £10,000 at any point during the tax year.
However, if you intend to repay the loan from your company you should leave a small balance outstanding until after the year has ended. By doing this, the ‘benefit in kind’ is reduced. What’s more as long as the balance you leave doesn’t exceed £10,000, it won’t by itself count as a ‘benefit in kind’ in the year following that in which you repay most of the loan.
While HMRC can opt to use a different method of calculation to stop the arrangement, it’s very unlikely they will.
For further tax tips consult your local accountants in Stockport, IN Accountancy, on 016 456 9666 or email firstname.lastname@example.org.