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
-
Corporation tax return filing deadline
-
Don’t overlook the partial exemption annual adjustment
As VAT year ends approach for many businesses, HMRC’s guidance highlights the need to carry out the partial exemption annual adjustment. This is often overlooked but can have a direct impact on recoverable VAT. What do you need to check?
-
MONTHLY FOCUS: USING YOUR COMPANY TO DIVERT INCOME TO FAMILY MEMBERS
Operating a business through a limited company is less tax-efficient than it used to be. However, it can still be a very useful way of diverting income to other family members. In this Monthly Focus, we look at the methods, and associated considerations, involved in doing this.