This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

Neither a borrower nor a lender be

Shared from Tax Insider: Neither a borrower nor a lender be
By Chris Thorpe, September 2021

Chris Thorpe looks at the role played by directors’ loan accounts in owner-managed businesses. 

One of the first things that a sole trader looking to incorporate their business must get into their heads is that the money within the new company is not theirs. They can no longer casually extract vast wads of notes from the ATM each Friday evening once a company is in place, as that money belongs to the company.  

If the owner (now shareholder or director) wants the money, it will often be declared as a salary or a dividend and taxed accordingly. Pensions and charging a rent for use of premises may be an option, but the most common alternative way of withdrawing funds is to borrow them. 

Loans from the company  

These borrowed sums may subsequently be written off or left,

This is one of our 2083 Premium articles

To see this article in full and unlock access to our complete library of 2083 articles click 'subscribe & unlock' below:

Subscriptions include a 14 day free trial
+ money back satisfaction guarantee

Begin your tax saving journey today

Each month our tax experts reveal FREE tax strategies to help minimise your taxes.

To get Tax Insider tips and updates delivered to your inbox every month simply enter your name and email address below:

Thank you
Thank you for signing up to hear from us!