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ruth@barlowfinan
Nov 2, 2022 1:41 PM UTC
Question

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

Directors borrow a sum of money each year and pay back in monthly installments within 8 months

3 replies

Ashleigh1
Nov 2, 2022 3:57 PM UTC

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. 

 

ruth@barlowfinanAuthor
Nov 9, 2022 4:21 PM UTC

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
Nov 10, 2022 4:49 PM UTC

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.

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