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Posted Wed, 22 Mar 2023 06:42:08 GMT by Paul Rudin
I have a limited company that I use for some software consultancy work. For a long while it's been dormant, but I'm now using it again. I have no taxable personal income in the current tax year, so I want to pay a bonus from the company to myself at the tax free limit. If the company doesn't have the money available at this minute, is there any reason why I can't lend the money to the company, pay the bonus to myself, and then later on, when the company has the money repay the loan?
Posted Thu, 30 Mar 2023 12:51:28 GMT by HMRC Admin 20
Hi Paul Rudin,

I understand that the company is active and carrying on business activities.
In that case lending  money to the company to pay the bonus would be okay.
However, to qualify for a deduction from trading profits the bonus must be paid wholly and exclusively for the purposes of the trade.
Please refer to the guidance in HMRC’s Business Income Manual manual at:
BIM37707 - Wholly and exclusively: duality of, or non-trade: remuneration, etc: ‘excessive’ remuneration: establish the purpose
for further information on this aspect.

Thank you.

Posted Thu, 30 Mar 2023 18:04:03 GMT by Paul Rudin
Great - thanks for the pointer to the guidance... that's clear.

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