It's fairly common for directors and/or shareholders of small companies to lend and borrow to/from their companies.

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Where a director/shareholder borrows money from their company, (and this may not necessarily be in the form of a formal loan, it could be overdrawing their net salary/dividends), and the amount exceeds £10k HMRC will class this as a benefit-in-kind and require a P11D return and Class 1A NIC's from the company and further income tax from the director.

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However, if the company charges the director/shareholder at a minimum rate equivalent to HMRC's official rate of interest, then there's no benefit-in-kind and no need for P11Ds etc.

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Interest paid by a company to a director/shareholder can be a very tax-efficient means of remuneration due to the Personal Saving Allowance, but a fair rate needs to be set and computed, we recommend quarterly. Basic rate income tax will then be deducted by the company and form CT61 completed and submitted to HMRC.

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