Did you know that charging interest on any loans made to your company may enable you to receive tax free income? This is as a result of two savings tax allowances.
In 2017/18, all higher rate taxpayers can claim a personal savings allowance of £500, this means that you can receive up to £500 of interest income free from tax. For basic rate taxpayers the allowance increases to £1,000.
In addition, for those whose total non-savings income is below £16,500 the savings income starting rate band may apply. This exempts up to £5,000 of savings income (interest but not dividends) from tax.
For instance, if you have a salary of £12,000 and receive interest of £10,000, £5,500 of your interest would be tax free. £1,000 from the personal savings allowance and £4,500 from the remaining starting rate band.
For more information, please contact Lesley Sutton on 01484 550037 or email email@example.com