Construction Insider Logo

Construction Insider

Get Access to the Construction Insider Magazine, Saint Sunday and Exclusive tips & tricks to scale your business.

You're all set!

Thank you for subscribing to the No.1 Construction magazine for construction businesses.

Oops! Something went wrong while submitting the form. Please check your email and try again

We Use Cookies! Learn More

Sounds Good!
Loaning Money To Your Company | Tax Tips
Construction Insider logo

Loaning Money To Your Company | Tax Tips

Day / Night Icon
Construction Insider - Arrow Left
Back to the Toolbox

Loaning Money To Your Company - What Are The Tax Benefits?

You may have thought about lending money to you company or having the company lend you some money to get through.

You can give loans to your company and withdraw them without any tax implications. Interest can also be charged as long as it is charged at the commercial rate.

The rate of commercial interest is around 5% to 15% for an unsecured loan and the interest paid by the company will be tax deductible.

If you are a close company (less than 5 shareholders) you need to be aware of the S455 tax charge. If you owe the company money at the end of the year, this will give rise to an additional tax charge payable by the company. This tax charge is the same rate as the additional rate for dividends.

The S455 tax charge is payable 9 months after your end of year and paid at the same times as your corporation tax. If you repay the loan to the company, you are able to reclaim the S455 tax you have paid (you have up to 4 years to reclaim).

This is quite a complicated area so we will discuss this in more detail in a separate blog.

Scenario 1

If you have extra funds available to lend to your company, you can charge commercial rate interest on the loan amount. This gives you tax free money by using the 'savings allowance' and the interest payments are tax deductible for the business.

The Savings Allowance applies to interest income and the amount of the allowance available depends on the level of taxable income:

Basic Rate - £1,000

Higher Rate - £500

Additional Rate - Nil

Scenario 2

If you have already lent money to your company, then you should be charging interest because:

  • To take advantage of the Savings Allowance to receive up to £1,000 of interest income tax free
  • It gives you additional protection for your loan

A loan to your company will be an unsecured loan and can be used to pay other creditors if your company has financial difficulties

Scenario 3

The company has funds to lend to your (or your employees)

If you give yourself a loan it will be tax free if it is under £10,000 and repaid within 9 months of your end of year (this applies to directors/shareholders).

The same also applies to your employees, if the loan is under £10,000. The employee will not pay any tax or National Insurance on that loan.

It is a good way to incentivise employees and a possible retention tool.


If the loan is longer than 12 months, it will be considered as 'yearly interest' and you are required to withhold 20% of the interest payments and pay it to HMRC via a CT61 quarterly return.

If you keep the loan to under 12 months, generally withholding tax will not apply.

Making sure the loan is legally documented makes it a low risk method of extracting funds out of the company especially when it is under £10,000.

Frequently asked questions

Construction Yellow Tag
This Article was included in:

This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

PS. Whenever you are ready, here's how to grow your construction business...

1. Join our Facebook Group which built completely for businesses within the construction industry. Real people, real support. - Now also available on LinkedIn.

2. Keep up to date with Construction Insider Providing you with industry insight, tips & tricks and much more to make sure you are ahead of your competitors!

3. When you are ready, Become a Saint Financial Group client, and we will provide you with the highest quality solutions to effectively scale your construction business. Book your meeting here!

Loaning Money To Your Company | Tax Tips

Written by the team at:

Saint Taxation

Got a question? Ask us here 😉
Construction Insider Logo

Grab Your FREE Copy Here!

Saint Accountancy
The Saints Dashboard
Advertise with us

How To Grow Your

🚧 Construction Businesses 🚧

Get Started With Saint

Construction Insider

Bookkeeping Tips For Small Construction Businesses

Bookkeeping is probably the most undervalued area of any business, it is seen as an expense or a chore to do however it's the foundation of your finances. The higher quality of your bookkeeping, the better conversations you can have about your business performance.‍

Next Article