Directors overdrawn loan accounts.  If a director is overdrawn with their company and falls within the loans to participators rules then the company has to pay corporation tax of 25% to HMRC

The Chancellor in his recent budget has increased this tax rate from 25% to 32.5% from April 2016!!

The loans to participators rules aim to prevent owners of close companies avoiding Income Tax and National Insurance contributions by remunerating themselves through loans or advances that are not repaid, rather than taking dividends or salary.

If you fall within the above rules and you wish to discuss your position then please before you take any action that you obtain professional advice. If you have any questions in respect of the above, then please do not hesitate to contact our tax experts by sending an email to kevin@kwaccounting.com