The personal tax cost of borrowing from your company is currently quite low.
If you borrow from your company, you can be taxed on a benefit in kind (BIK) basis; however, relatively small loans are exempt.
Only when the balance owed exceeds £10,000 in the tax year does the charge apply. In the tax year in which you intend to repay the loan is left a small balance which is repaid after the tax year ends.
Because of the way in which HMRC’s standard calculation works, this reduces the taxable benefit. While HMRC can opt to use a different method of calculation, it’s very unlikely that they will.
Tax saving for company loans
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