BBL & Personal Debt

Johnny1987

Hi,

New to the forum and was hoping i could get some help/advice.

My situation is as below;

Sole Trader;
Financial year for me starts with a £0 balance in the business account.

Required 5k via BBL, took 17.5k as interest rate was so low.

So business financial year for me then shows 17.5k come in as a loan.

After using the 5k for business equipment, 12.5k sits in business account with nothing else going in or out of the account as of right now.

Can i draw 10k out of the business to pay off personal debt?

As i understand it, i am owing £0 for tax as of right now as the loan is not classed as income therefore cant be taxed on that amount.

Any help would be appreciated.

Jeremy535897

You can use a BBL for personal living expenses as a sole trader. If those living expenses have been paid for using other debt, you can use the BBL to pay off the debt. Just be aware that if your capital account goes negative (you owe the business money rather than it owing you money), claiming tax relief on the interest you pay on the loan a year down the line may be restricted.