Is there any tax- exempt limit for S455 CTA2010 tax charge on the director or employee loans made by a close company?
s455 CTA2010 tax charge is applicable when a company gives a loan to its directors or employees and it is not repaid within nine months and one day of the accounting year end. The current rate for the tax charge is 32.5% from 6 April 2016 for all relevant loans made or benefits conferred by close companies.
S455 tax is only due on the new loan, not the total outstanding loan. The charge applies to a debt created or loan made in an accounting period (AP) rather than the total amount outstanding at the end of the AP (although the two amounts may well be the same, particularly in the first AP).
There is no minimum exempt amount for the controlling directors or participators (who owns more than 5% of the ordinary share capital) of a close company. So any loans taken out will be subject to the tax charge if not repaid within the time period.
However, where a close company makes a loan or advance for any purpose to a relevant person who is also a director or employee of the close company or of any associated company, that loan or advance is not within CTA10/S455 if all the following conditions are satisfied:
When deciding whether the limit of an individual employee has been reached, do not take loans to the spouse into account.
Where both husband and wife are directors or employees, they will each be entitled to a separate limit of £15,000.
Our VAT registered client is to buy…
My client installs solar panels. They have…
What are the current rules for…
Health and medical professionals are usually members of…
Can my limited company obtain the 130%…
Can I elect for a Marriage Allowance…
Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.