Director's loan agreement
A director shareholder doesn’t have to sign a loan agreement when they borrow money from their company. The terms of borrowing can be agreed orally or just implied. However, in certain situations a director is required by company law to obtain permission from the shareholders prior to borrowing company money.
Get it in writing
Shareholder approval (generally by ordinary resolution) is only required for directors’ loans in excess of £10,000 (the limit is £50,000 if the loan is to meet expenditure on company business). But in all situations where a company lends money to a director we recommend that a written agreement setting out the key terms should be drawn up. Apart from anything else it will help prove the existence of a loan where HMRC makes enquiries.
Use and modify as needed our sample loan agreement for all company to director loans.
Related Topics
-
MONTHLY FOCUS: CGT RELIEF FOR SHARE DISPOSALS
Business asset disposal relief is available where businesses are sold, but can also apply to the disposal of company shares and, in some circumstances, assets used by the company. What are the rules?
-
Could HMRC incorrectly withdraw you from annual accounting?
Your business can only use the annual accounting scheme (AAS) if its annual sales are below certain limits. Is there a risk that HMRC could wrongly instruct you to leave and, if so, what can you do about it?
-
Mandatory payrolling of employee benefits delayed until 2027
The start date of mandatory payrolling of employee benefits has been delayed from April 2026 to April 2027. What do we know so far?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.