Create breathing space for director loans under s455

Changing accounting year ends can delay the payment of section 455 tax charges on director loans, explains Andrew Marr, managing partner at Forbes Dawson

Any loans to participators - broadly shareholders - that are outstanding nine months after the year end will be subject to what is known as a section 455 charge. This means that the company making the loan has to pay 33.75% of the loan’s value to HMRC at that time.

Once the loan is either repaid or written-off (which has income tax implications) then the company can ask HMRC to repay the charge nine months after the year end in which it was repaid or written off.

Example

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