Money into and out of a new business

TimEG · 03-01-2007, 08:39 PM

Hi,

I have a question regarding the money I started my business with. I have recently started a ltd business with £2000 of my own money. At some point in the next month or so I shall be adding another £2000 in order to cover a large contract. That £4000 is like I've loaned the business money so does that mean I can later take that back out without paying tax or do I have to pay it back to myselft through PAYE?

Cheers, Tim

Ian J · 04-01-2007, 10:12 AM

Loan accounts are not subject to tax or Nic payments as you are merely repaying yourself and not drawing an income.

TimEG · 04-01-2007, 05:54 PM

That's great news. I thought that must be the case but wasn't 100% sure. Makes it easier to add funds if I know I can get them back again!

Joyous · 06-01-2007, 12:48 PM

Hi Tim

You also have the option of charging your company interest on any money that you lend to it. Of couse the interest would be taxable income in your hands, but for the company interest is an allowable expense thereby reducing taxable profits.

Regards

Joy

TimEG · 08-01-2007, 04:33 PM

That was going to be my second question so you beat me too it! Thanks!

JamesS · 13-01-2007, 04:31 PM

Also, if you personally need money, the company can "loan" you up to £5000 with 0% interest

A penny over though and its 8% + base rate.

TimEG · 13-01-2007, 05:47 PM

hmmm. What a great tip! Is there a maximum term that can be paid back over?

JamesS · 13-01-2007, 06:13 PM

Quote:

Originally Posted by TimEG

hmmm. What a great tip! Is there a maximum term that can be paid back over?

Not that I'm aware, but if you took the mick the tax office may ask a question or two.