New rules governing the amount of NI and tax free money a director can borrow from their own company has doubled.
Prior to the rule change, a director could borrow up to a maximum of £5,000 with a low rate of interest (usually 4% or less per annum) or interest free with no tax or NI payable. As of the 6th April 2014 the limit increased to £10,000.
However the tax and NI free limit is final and if for any reason the loan increases above £10,000 limit at any point, the tax and NI charge is enacted on the whole amount for the tax year or the period of the loan if shorter than the current tax year.
For more information on this change please give us a call.
Source: Tax and Advice: company Director, Indicator FL Memo, 15th Year, Issue 14, April 16, 2014