Skip to main content
R
ruth@barlowfinan
November 2, 2022
Question

How do I record the business making a loan to the directors and their subsequent repayments?

  • November 2, 2022
  • 1 reply
  • 0 views
Directors borrow a sum of money each year and pay back in monthly installments within 8 months

1 reply

A
Ashleigh1
November 2, 2022

Hello Ruth@barlowfinan, 

 

Welcome to the Community page, 

 

So the loan needs to be a current liability or a non-current liability dependent on the length of the loan then you would need to do an expense to pay off the loan. 

 

If you have a look at this help article it has all the steps you need to do to be able to record this in your account. 

 

R
ruth@barlowfinanAuthor
November 9, 2022

But its the business making the loan to the directors, surely a loan taken out by the business is a liability not the other way around?

paul72
paul72
November 10, 2022

Hi @ruth@barlowfinan 

 

Yes - it's an Asset for the business.

 

As an aside - the company should be really careful regarding Benefit in Kind with this.  Are the Directors paying interest on these loans?  If not, HMRC would construe this as a taxable benefit.

Terms & ConditionsAccessibility statement