Borrowing from my own business

Jaco70

I have a small limited company with a reasonable bank balance to finance everyday trading requirements. We have plenty to pay wages and suppliers on time, all the time. I find that our tax system is a real disincentive to taking out extra salary or dividends once I hit a certain income level. Does anyone have any experience of borrowing from their own business? I’ve injected money in to the company in tougher times, via a simple interest free directors loan and then had the money back later on, but when I spoke to my accountant about taking money out by means of a loan he made it all sound rather complicated. That was some years back though and I can’t remember his reasoning. I’m talking of figures in the region of 10 to 20k, no more than that. 
I’ve had acquaintances who’s business and personal accounts seem interchangeable, constantly taking money from one or the other, but these are often people with precarious balance sheets, and some of these businesses have gone pop later on.

bris

https://www.accountsnet.co.uk/how-to-take-a-loan-from-your-limited-company/#:~:text=Provided%20a%20loan%20taken%20from,be%20reported%20on%20a%20p11d.

A 3 second google tells you everything you need to know

Jaco70

bris said:

https://www.accountsnet.co.uk/how-to-take-a-loan-from-your-limited-company/#:~:text=Provided%20a%20loan%20taken%20from,be%20reported%20on%20a%20p11d.

A 3 second google tells you everything you need to know

Yes that is very clear, thank you. Basically only borrowing up to 10k for a short period is practical. 

thankyou77

A 3 second google tells you everything you need to know

What is the point in mentioning "3 seconds", why are you digging somebody who came here for advice?
 Could have just posted the link without the high and mighty sarcastic comment

MEM62

thankyou77 said:

A 3 second google tells you everything you need to know

What is the point in mentioning "3 seconds", why are you digging somebody who came here for advice?
 Could have just posted the link without the high and mighty sarcastic comment

More to the point, why are you 'digging at someone that provided that advice?  OP had a question, @bris pointed them in the right direction and the OP seems happy with the outcome.    

thankyou77

MEM62 said:

thankyou77 said:

A 3 second google tells you everything you need to know

What is the point in mentioning "3 seconds", why are you digging somebody who came here for advice?
 Could have just posted the link without the high and mighty sarcastic comment

More to the point, why are you 'digging at someone that provided that advice?  OP had a question, @bris pointed them in the right direction and the OP seems happy with the outcome.    

I think you're missing the point. I am just saying there is absolutely no need for the sarcasm, but it seems a lot of the "regular posters" respond to people like this with increasing frequency. Always belittling people

Grumpy_chap

I think the OP should take the Accountant's view before doing anything - the link posted by @bris gives advice that deviates from my understanding based (but this is not something I have given thought to in recent years so the rules may have changed).  
The OP's reference to people using business and personal accounts as interchangeable may be sole traders rather than Ltd Co.
Lending money interest free to the business is quite different to the business lending money to the Director / Shareholder as the later can give rise to personal (and taxable) benefit, but not the other way round.

jjdc

Article in first reply is a good outline. Keeping amount under £10k and paying back before end of accounting year is simplest way (and is what myself and wife have done in past, and then repaid out of dividend in following tax year). Also note you can't just pay back the loan a day before year end, and then take it straight back out the first day in to new accounting period. If HMRC got wind they'd treat it as though you'd never paid it back.

Also, the £10k limit is per company, so if you have 2 ltd companies, you can take a £10k loan from each interest free.