How much interest can I charge on my Director’s Loan?

Interest can be charged on monies loaned to a company by Company Directors. There is no rule as to the interest rate that is set on the borrowing but if it is more than a reasonable market rate HMRC will see the payments as part of a benefits package and charge Benefit in Kind tax via P11d.

Generally most business loans have at least 10% APR and whilst some exceed 20% we would suggest that would be an upper limit.

Damion Viney

Damion Viney has been supporting business owners to make a success of their ventures since 2011 when he set up Co-. Blogs cover all aspects of business development. He is co-author of Improving the Numbers. 

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How much S455 Tax will I pay on my overdrawn Director’s Loan Account?