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Budget 2016: The proposals in detail – extra tax to pay if you borrow money from your limited company

When a company controlled by 5 or fewer shareholders makes a loan to a shareholder, the company is required to pay tax to HM Revenue and Customs.

The rate of tax increases from 25% to 32.5% from 6 April 2016.

This increase is because of the extra tax payable on dividends.

This tax is not payable if the loan is repaid within 9 months of the company year end.

Andy Scott

 

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