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Interest versus principal
Interest and finance costs on borrowing for genuine business purposes are generally deductible against profit, lowering corporation tax. Repaying the principal is not an expense — it is returning capital — so it does not reduce your tax. See the true cost of borrowing.
The conditions
The loan must be for the trade, not personal use, and the treatment can be affected by specific rules. Keep clear records tying the borrowing to business purposes, and confirm the detail with your accountant. Test the net cost via the affordability calculator.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Can I deduct loan repayments from my tax?
Only the interest portion, where the loan is for business purposes. The capital repayment is not deductible because it is returning borrowed money.
Does borrowing reduce my corporation tax?
The allowable interest reduces taxable profit, so it lowers your bill. The principal repayment does not.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.