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I opened a self-employed business (in the UK). As a starting budget I sent £100 from my taxed salary to my business account to have something on it. Can I send it back from my business account to my personal account without having to pay any tax on it, or any explanation why I sent it?

Ben Miller
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Gergő Horváth
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3 Answers3

32

You won’t have to pay tax on it, but if HMRC asks about it (unlikely but possible) you will have to explain it. But saying “I was repaying myself the money I put in to start the business”, together with the bank statement showing that transaction, should be a sufficient explanation.

Mike Scott
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When you give the loan, print a sheet of paper recording it: "I, Gergö Horvath, give a loan of £100 to "Gergö's Children's Entertainment Company". And keep it. And when you return the loan, you print another sheet of paper recording it: "We, Gergö's Children's Entertainment Company, repay a loan of £100 to Gergö Horvath".

That's enough explanation. Having nothing at all is not enough. No interest payment or tax on interest payment is needed, because the interest payment on a £100 loan would be minimal and not worth the effort.

gnasher729
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5

Technically, you need to ask yourself if it was it a loan, or an equity investment.

If you treat it as a loan, then you should pay it back with interest, and the interest would be income.

RonJohn
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