News: October 2013
Tax charge on taking a loan from a close company – more bad news to come?
As I have mentioned in previous editions of the Tax E-News, there has been a tightening of the rules regarding the receipt of a loan from a close company. The company can be taxed 25% on the amount of a loan drawn by a shareholder which is still outstanding more than 9 months after the end of the company’s accounting period.
We now find that they are looking at a possible increase in the tax charge, from 25% to perhaps 40%. A completely different approach suggests a reduction in the tax charge to 5%, but with no tax refund when the loan is repaid. All of these changes mean it will be important to keep all directors’ loan accounts up to date in terms of identifying money in and money out, and the sources of the latter.