Loans between companies and their staff can be routine, often just a helping hand or a cash flow fix.
However, once those sums tip over £10,000, the tax rules get less friendly, and the forms start piling up.
HM Revenue & Customs (HMRC) has recently begun nudging businesses whose accounts show individual loans of more than £10,000.
These nudges are not audits, but they are warnings.
They suggest that you check whether these loans should be reported as benefits in kind via the P11D process for the 2024/25 tax year.
Two conditions turn an otherwise innocent loan into a taxable benefit:
Tick both boxes and you have what HMRC calls a “beneficial loan”, and that means tax paperwork.
Even if the director or employee pays back the loan within nine months of the year-end (a key date for Corporation Tax), that does not spare you the P11D burden.
For benefit-in-kind (BiK) purposes, it is the loan’s presence during the tax year that counts, not whether it is tidied away afterwards.
It is not just direct employees or directors that can cause a problem.
If the loan reaches a family member, the company could still face reporting duties.
For smaller or owner-managed businesses, where business and personal finances often intermingle. this is where things can get murky.
These are exactly the types of arrangements that attract HMRC’s attention.
Unlike some benefits, loans cannot be processed through payrolling.
If your loan crosses the £10,000 threshold and meets the low-interest condition, you will need to report it on a P11D.
You will also have to submit a P11D(b) to account for the Class 1A National Insurance, all due by 6 July 2025.
If your company has lent over £10,000 to anyone connected to the business in the 2024/25 tax year, you should:
Get on top of it early. These are the sorts of tasks that cause last-minute panic if left too long.
