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By (user no longer on site) OP
over a year ago
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Folks,
With reference to bounce back loans are they a company expense?
I.e can they be deducted as an expense before taxation on profit?
This is in reference to a ltd company |
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I don't know what that is compared with any other type of loan, but a limited company can borrow money and the repayments including interest can be deducted as a cost so there's no corporation tax paid on it. The money received is not profit because it's not actually the company's money, so there's no corporation tax to pay.
That's my understanding from having run one, but naturally you are best off asking a qualified accountant. Luke |
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By (user no longer on site) OP
over a year ago
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"I don't know what that is compared with any other type of loan, but a limited company can borrow money and the repayments including interest can be deducted as a cost so there's no corporation tax paid on it. The money received is not profit because it's not actually the company's money, so there's no corporation tax to pay.
That's my understanding from having run one, but naturally you are best off asking a qualified accountant. Luke "
Thank la Luke
I thought that myself. But I’m convinced I read somewhere it was not allowed to be seen as a cost. My quick sums maybe mad but is that not the government giving money away?
Income 50 k per year. Loan £900
Per month.
So you’re taxed of 50k minus £10,800
So you are taxed on £39k
But the interest on the £10800 is minimal.
Am I sounding mad? Lol |
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"I don't know what that is compared with any other type of loan, but a limited company can borrow money and the repayments including interest can be deducted as a cost so there's no corporation tax paid on it. The money received is not profit because it's not actually the company's money, so there's no corporation tax to pay.
That's my understanding from having run one, but naturally you are best off asking a qualified accountant. Luke
Thank la Luke
I thought that myself. But I’m convinced I read somewhere it was not allowed to be seen as a cost. My quick sums maybe mad but is that not the government giving money away?
Income 50 k per year. Loan £900
Per month.
So you’re taxed of 50k minus £10,800
So you are taxed on £39k
But the interest on the £10800 is minimal.
Am I sounding mad? Lol "
The interest amount is an expense (which will be in your P&L) however the loan capital does not show as an expense in the P&L. When the loan capital enters the business, it is cash in bank and that loan amount becomes a liability in the balance sheet.
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By (user no longer on site) OP
over a year ago
|
"I don't know what that is compared with any other type of loan, but a limited company can borrow money and the repayments including interest can be deducted as a cost so there's no corporation tax paid on it. The money received is not profit because it's not actually the company's money, so there's no corporation tax to pay.
That's my understanding from having run one, but naturally you are best off asking a qualified accountant. Luke
Thank la Luke
I thought that myself. But I’m convinced I read somewhere it was not allowed to be seen as a cost. My quick sums maybe mad but is that not the government giving money away?
Income 50 k per year. Loan £900
Per month.
So you’re taxed of 50k minus £10,800
So you are taxed on £39k
But the interest on the £10800 is minimal.
Am I sounding mad? Lol
The interest amount is an expense (which will be in your P&L) however the loan capital does not show as an expense in the P&L. When the loan capital enters the business, it is cash in bank and that loan amount becomes a liability in the balance sheet.
"
That makes more sense!
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