Can a limited company lend money to the director or another person?
What are the limits, the rules, any minimum rate, the things to know...?
Another person, not a shareholder or director, will be treated as when a bank loans you money. You are loaning out money and you are sort of getting interest income out of it or some other benefit, which needs to be put down in you company's annual return.
But for a shareholder or director is different matter. Check the HMRC source for sure and check with your accountant, if you have one.
If you owe your company money
You or your company may have to pay tax if you take a director’s loan. Your personal and company tax responsibilities depend on how the loan is settled. You also need to check if you have extra tax responsibilities if:
If the loan was more than £10,000 (£5,000 in 2013-14)
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.
If you paid interest below the official rate
If you’re a shareholder and director, your company must:
You must report the interest on your personal Self Assessment tax return. You may have to pay tax on the difference between the official rate and the rate you paid.