I am dealing for the first time with the accounts of a company where the director has taken a £7,100 loan and did not pay it back within nine months after the accounting period ended. I am using ‘tax filer’ software to prepare these accounts and my question is: When I fill-up the profit and loss account and balance sheet in tax filer in the corporation tax box, do I fill up the amount of corporation tax due on profit for the year only, or corporation tax due on profit plus the 32.5% tax due on the director’s loan not repaid? 

 

It is difficult for me to comment on tax software that I am not familiar with, but I can say that under corporation tax self-assessment, companies show the 32.5% tax on loans as part of the total corporation tax due. However, it is worth looking at www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm61540 because if this individual does not own more than 5% of the company, the 32.5% corporation tax charge may not apply.