Repaying the value of benefits

You may have borrowed assets or money from your company with the intention of repaying or making good the cost to the company in the future. If you make this repayment by 6 July following the end of the tax year in which you received use of the asset or money, no benefit-in-kind tax charge will apply for that tax year.

The taxable benefits which can be effectively cancelled by this repayment mechanism are: non-cash vouchers, cars, vans, fuel for cars or vans, accommodation, credit tokens, and all benefits treated as earnings. It doesn’t apply to interest payable on loans.

Where these benefits are ‘payrolled’ monthly, to avoid a benefit charge, the reimbursement must be made by 5 April, or 1 June in the case of reimbursement for private fuel.

Where a loan is advanced to an employee or director, there is no tax charge for the individual (but there may be for the company) if the amount outstanding at any point in the tax year doesn’t exceed £10,000. If a greater amount is borrowed, the tax charge can be avoided if the employee is required to pay interest on the loan at a rate equal to or greater than the official rate (currently 2.5%).

This interest must actually be paid to the company, not just accrued in the accounts. It makes sense to pay any interest due on loans before 6 July 2018, so an accurate form P11D can be completed and submitted by that date.