Interest on small director loan

surreytech

Does director of a limited company need to pay interest to the company for small loans (let’s say £2000) if it is paid back in two months?

Grumpy_chap

Ask your Accountant, but there is a "de-minimimus" exemption that may apply.  I don't know the rules and limits.

jjdc

Under £10k there's no interest to be paid (although the company could if it wished). A penny over - even if accidental, eg overpayment of dir. salary, then you need to pay back with interest at HMRC rate on entire sum. I try and pay back before end of accounting period so doesn't show on accounts, but as long as you pay back within 9 months(?) of accounting end the company pays no extra tax. Also when you pay it back, you need to leave a month before taking out again, otherwise will be treated as though it was never paid back should HMRC find out. 

Obv verify the above with your accountant

surreytech

Thank you very much for clarification. I was confused by the wording on HMRC website as to when it would be considered as BIK if it is:
- Above 10k AND interest at HMRC rate not paid
or
- Above 10k OR interest at HMRC rate not paid
Sounds like it is the former then. And thanks for the note about making sure it doesn’t go over and the 30 day rule. I will check with my accountant too.