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Small Business Owner FAQ - October 2022

Should I incorporate my business?

There are many considerations when looking to transfer your business to a Limited company. Some of the benefits are limited liability, an ability to claim more expenses and to structure your tax planning in such a way as to take home additional funds. The downsides include some additional admin, directors’ responsibilities and potentially increased costs. Your accountant can help you work out the best route for you.

When do I need to repay my directors loan in order to avoid an additional tax charge?

If your company has lent you money during its financial year, there will no additional tax liabilities if the loan is less than £10,000 and repaid within 9 months of the company tax year. If a loan is in excess of £10,000 and is interest free, you may incur a benefit in kind on your self-assessment. If the loan remains outstanding nine months after the year end, then an additional S455 charge to Corporation tax will be due at 33.75% if the value of the loan. This can be reclaimed once the loan is repaid.

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