Any money taken out of a company by a director, where it is not paid out as salary, dividends or expenses, constitutes a director's loan.
Loans over £10,000 should generally be approved by the shareholders.
Records must be kept for any money borrowed from a company (or lent to a company) - this is known as a 'director's loan account'. At the end of the financial year, any money owed to the company (or vice versa) must be included in the balance sheet as part of the annual accounts.
Tax may need to be paid on a director's loan. This depends on whether the director’s loan account is overdrawn (you owe the company) or in credit (the company owes you).
If you owe the company money you or your company may have to pay tax if you take a director’s loan. You may have extra tax responsibilities if:
the loan was more than £10,000
you paid your company interest on the loan below the official rate
If you lend your company money, the company will not pay corporation tax on this money you lent it. Any interest you charge your company on a loan counts as both a business expense for your company and personal income for you. You would need to report this income on your personal Self assessment tax return.
Your company must pay you the interest less income tax (at the basic rate of 20%) and report and pay the income tax every quarter using a CT61 form.