If you run your business as a limited company, you may have injected funds at some stage, so the company owes you money. However, you may also have “borrowed” funds from the company, so that you owe money back to the company. This will be funds that have been extracted other than via dividends, salary, rent or interest.
There are potential tax implications in this latter scenario. You may have to pay tax as a benefit in kind, or the company may have to pay tax in addition to the corporation tax liability. This is, as is the case with many tax areas, quite complex. If you are planning to extract funds as a loan, we urge you to discuss this with us before doing so, so that you are fully aware of the implications.
It is not all “bad news” though – if you have lent the company money, the company might be able to pay you interest on the loan.
