Loan written off: are you in HMRC’s crosshairs?
HMRC is writing to directors that took a loan from their company that was later written off or released. What should you do if you receive a letter?
The letters are being sent to taxpayers who:
- had a director’s loan that was written off or released between April 2019 and April 2023; and
- did not declare the amount as income on their self-assessment tax return.
The amount released or written off is treated as an income distribution and is taxable at the appropriate dividend rates. If you do need to pay extra tax you can tell HMRC by using the digital disclosure service. This service can be used even if the loan was written off or released before April 2019, but for loans released or written off since 6 April 2023, you can simply amend your tax return to reflect the additional income.
Related Topics
-
Payment deadline for corporation tax
-
HMRC targets undeclared consultancy income in the medical sector
HMRC is writing to people working in the medical sector where information supplied by private healthcare providers suggests that consultancy fees may have been omitted from their tax returns. Recipients have 30 days to check their position and respond. What should you do if you get a letter?
-
MONTHLY FOCUS: BUSINESS AND AGRICULTURAL PROPERTY RELIEF: WHAT DO THE NEW IHT RULES MEAN FOR YOU?
The inheritance tax treatment of businesses and farms changed fundamentally from 6 April 2026. The amount that can qualify for 100% business property relief and agricultural property relief is now capped, potentially leaving families with a significant tax bill for the first time. What has changed, and what should business owners and farmers be doing about it?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.