Director's loan agreement
A director shareholder doesn’t have to sign a loan agreement when they borrow money from their company. The terms of borrowing can be agreed orally or just implied. However, in certain situations a director is required by company law to obtain permission from the shareholders prior to borrowing company money.
Get it in writing
Shareholder approval (generally by ordinary resolution) is only required for directors’ loans in excess of £10,000 (the limit is £50,000 if the loan is to meet expenditure on company business). But in all situations where a company lends money to a director we recommend that a written agreement setting out the key terms should be drawn up. Apart from anything else it will help prove the existence of a loan where HMRC makes enquiries.
Use and modify as needed our sample loan agreement for all company to director loans.
Related Topics
-
The tax incentive to do a thorough stock-take
The annual stock-take isn’t exactly your favourite thing to do. You know resources could be better spent elsewhere so you try to get through it as quickly as possible. Why might it be worth a little more of your time?
-
Unused sales suppression tools can still trigger penalties
HMRC has published a new compliance factsheet explaining the penalties that can apply where a business possesses an electronic sales suppression (ESS) tool, even if it has never actually been used to suppress a sale. What do you need to know?
-
Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?