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
Records you must keep
You must keep a record of any money you borrow from or pay into the company – this record is usually known as a ‘director’s loan account’.
At the end of your company’s financial year
Include any money you owe the company or the company owes you on the ‘balance sheet’ in your annual accounts.
Tax on loans
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
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:
- the loan was more than £10,000 (£5,000 in 2013-14)
- you paid your company interest on the loan