Claiming Interest Expenses From Companies

It is often the case that owners of small limited companies need to borrow to fund the company through it's early trading period. This could be through a personal overdraft, personal credit cards or via a loan. Did you know that only the loan arrangement provides the ability to be reimbursed for the interest expense without incurring a tax liability?

Seems a little harsh I know.

Unfortunately, if you reclaim personal overdtaft interest or personal credit card interest from your limited company, the interest received will be taxed as income, but you will receive no personal tax relief on the interest expense incurred.

The only options to avoid this situation are to take out a personal loan allowing the interest expense to be reclaimed on your tax return, or try to put the arrangements into the company name through it taking on the overdraft, even if this means you having to guarantee the overdraft personally.

To learn more about how we help clients mitigate their tax liability, call us on 01235 868888.