Jennifer Adams explores where company owners might get useful short-term loans.
The cheapest personal bank loan rates are double what they were 18 months ago, though this has stabilised recently. Currently, the best loan interest rate between £7,000 and £25,000 is 5.9%.
However, there is a source of finance from which a director or participator of a private limited company can borrow at 0% interest - from their company (assuming it has the money available). As ever, there are restrictions; but such loans can have a relatively low annual tax cost and be useful for short-term loans.
The ‘section 455 charge’
A point that is sometimes missed is that a loan can be made by the company to not only its directors; HMRC’s Company Taxation Manual (at CTM60150) states that an associate or a participator can also take advantage. A loan can
