Director Loan to Company to buy company car

[jea040609]

Hi all,

I am a proprietary director of a small business.

I am thinking of loaning my company an amount of money, in order to buy a company car.

My understanding is that I should draw up a written agreement to cover myself should the business ever get wound up, so that I am noted as a creditor.

Can someone please advise, how much, if any, interest I can charge the business for this loan. I understand that any interest charged can be written off for tax purposes by the business, and that I will also be required to advise revenue of any income derived from interest on my own Form 11.

Thank you.

 

[Ciru75]

Any interest to a director above 13% of the lower of the loan or the issued share capital of the company is not allowable as a deduction.

See page 3 of: https://www.revenue.ie/en/tax-profe...ains-tax-corporation-tax/part-13/13-02-01.pdf

 

[Brendan Burgess]

Hi jea

That sounds really complicated. Why don't you just buy the car yourself and claim expenses?

There are much fewer tax complications.
Insurance is probably simpler.
If the company does get wound up, your car is not an asset of the company.

If you do lend the company money, it may make more sense to repay the loan before paying yourself salary taxed at the top rate of tax. This needs professional advice.

Brendan