How do I show a Bounce Back Loan in company accounts?

In short: Show a Bounce Back Loan as a creditor, never as income. The capital the company must repay in the 12 months after its year end goes in creditors falling due within one year, and the rest in creditors falling due after more than one year. The 2.5% interest is a deductible cost; capital repayments aren't (GOV.UK: Bounce Back Loan). Taxley prepares and files the Company Tax Return (CT600) with micro-entity accounts for £39.95, with both creditor lines on the balance sheet, and files the accounts at Companies House once the return is paid and the accounts are finished.

Take the 30-second check to see whether Taxley fits your company, or work out the tax effect with the Corporation Tax calculator.

Key facts (checked on 8 October 2026)

How do you show a Bounce Back Loan in company accounts?

A Bounce Back Loan is money the company owes, so it sits in creditors on the balance sheet. Split the outstanding capital at the year end into the part repayable within the next 12 months and the part repayable later. Interest charged for the year goes in the profit and loss account; capital repaid only reduces the creditor.

The loan was never a grant. The Insolvency Service says money lent under the scheme "must be paid back, over 6 or 10 years, with payments starting 12 months after your company receives the loan" (GOV.UK: Fact sheet: Bounce Back loans). The cash went into the bank with a matching creditor, leaving the profit and loss account untouched. The scheme let small and medium-sized businesses borrow from £2,000 up to 25% of turnover, with a £50,000 maximum. The government guaranteed 100% of each loan, and there were no fees or interest to pay for the first 12 months; after that the rate is 2.5% a year (GOV.UK: Apply for a coronavirus Bounce Back Loan). The scheme was open to applications until 31 March 2021.

Repayment terms vary between loans. The original term was 6 years, and before the first repayment lenders offered three Pay as You Grow options: extend the term to 10 years, pay interest only for 6 months (up to 3 times), or pause repayments for 6 months once (GOV.UK: Apply for a coronavirus Bounce Back Loan). Each option changes how much capital falls due in a given year, so the lender's own statement and repayment schedule, not a formula, decide the split in the accounts.

Which part of a Bounce Back Loan is due within one year?

The part due within one year is the capital in the instalments the lender could require in the 12 months after the balance sheet date. Everything else outstanding is due after more than one year. The accounts regulations treat each instalment as due "on the earliest date on which the lender could require" payment (SI 2008/409 Sch 8 para 6).

Use the capital element only. A monthly Bounce Back Loan payment mixes interest and capital, and interest for future months isn't owed at the year end because it hasn't been charged yet. The within-one-year creditor is therefore the year-end balance less the balance the schedule shows 12 months later. Interest charged up to the year end but not yet paid is a cost of the year just ended, recorded as an accrual; our guide on accruals and prepayments explains how. A pause or interest-only period in the next year means less capital falls due, so the within-one-year figure is smaller. If the company is in arrears, the paragraph 6 test may make more of the loan due within one year, so read the loan agreement and the lender's letters before splitting.

Where does a Bounce Back Loan go on a micro-entity or small company balance sheet?

On a micro-entity balance sheet the loan goes in item E, creditors falling due within one year, and item H, creditors falling due after more than one year. Small company accounts use the same E and H headings, with sub-item 1, bank loans and overdrafts, under each (SI 2008/409 Sch 1).

The letters E and H come from Format 1, the vertical layout most small companies use. Format 2 shows creditors as one block, item C under liabilities, so the regulations add a note: for a micro-entity, the aggregate amounts falling due within one year and after one year must be shown separately, and for a small company the same split is needed for each creditor item and for the total (SI 2008/409 Sch 1). The split also changes net current assets: the within-one-year part reduces item F, while the later part is deducted only after item G, total assets less current liabilities. Our guide to what goes in micro-entity accounts walks through every lettered item.

Notes differ by size. A micro-entity's accounts need no note about the loan, because regulation 5A says nothing in Schedule 1 requires micro-entity notes except the paragraph 57 note on financial commitments (SI 2008/409 reg 5A). Small company accounts must state the total of instalments falling due more than five years after the year end, and, for each creditor item, any debts the company secured, with the nature and form of the security (SI 2008/409 Sch 1 para 55). Check the loan agreement to see whether the company gave any security; the government guarantee is a promise to the lender, not security given by the company. The notes to the accounts guide has example wording for a secured debts note.

Is Bounce Back Loan interest deductible for Corporation Tax?

Yes. A Bounce Back Loan is a loan relationship, so the interest the company is charged is a debit under Part 5 of the Corporation Tax Act 2009. A trading company deducts it as a trading expense; a property company deducts it as a non-trading debit. The amount follows the interest in the company's profit and loss account.

A company has a loan relationship when it owes a money debt arising from "a transaction for the lending of money" (CTA 2009 s.302), and interest under it is one of the matters brought into account (CTA 2009 s.306A). For a loan taken for a trade, section 297 treats the debits as expenses of the trade (CTA 2009 s.297). HMRC's examples of a trading loan include one to finance an expansion of the trade, and if half of a trade loan is later spent on a non-trade purpose such as buying investments, the interest on that half becomes a non-trading debit from then on (HMRC manual CFM32020). HMRC also says a property business isn't treated as a trade for this purpose, so a rental company's loan interest is a non-trading loan relationship debit (HMRC manual CFM32030). Non-trading debits are set against non-trading credits such as bank interest, and any deficit can be set against other profits.

Capital repayments get no relief. The general rule is that loan relationship debits are the amounts "recognised in determining the company's profit or loss" under generally accepted accounting practice (CTA 2009 s.307), and HMRC calls this following the accounts (HMRC manual CFM33070). Repaying capital reduces the creditor on the balance sheet and never passes through profit or loss, so no part of it is a debit. The money received was never taxable income either, for the same reason: it was a loan, recorded as a creditor. HMRC says Bounce Back Loans are not COVID-19 support payments or grants and don't need reporting on a tax return (GOV.UK: Reporting COVID-19 grants and support payments).

How do the numbers work for a £30,000 Bounce Back Loan?

At 31 March 2026, a £30,000 Bounce Back Loan drawn on 30 June 2020 and extended to 10 years has £15,007.62 of capital left: £3,389.34 falls due within one year and £11,618.28 after more than one year. The interest charged in the year is £420.14, which saves £79.83 of Corporation Tax at 19%.

The example is illustrative. The company drew £30,000 on 30 June 2020 and paid no interest or capital for the first 12 months. Before the first repayment it took the Pay as You Grow option to extend the term from 6 to 10 years (GOV.UK: Pay as You Grow announcement), so 108 monthly payments run from 31 July 2021 to 30 June 2030. Interest is charged at 2.5% a year (GOV.UK: Bounce Back Loan), worked out here as 2.5% ÷ 12 = 0.20833% a month on the opening balance, with each payment made on the last day of the month. The fixed payment is £30,000 × r ÷ (1 − (1 + r)^−108), where r = 0.0020833, which gives £310.49. The first month's interest is £30,000 × 0.0020833 = £62.50, so £310.49 − £62.50 = £247.99 of the first payment repaid capital.

The Corporation Tax effect comes from the interest alone. If the company's profits are £50,000 or less, it pays the small profits rate of 19% (GOV.UK: Corporation Tax rates), so deducting £420.14 of interest saves £420.14 × 19% = £79.83. The £3,305.74 of capital repaid saves nothing. The comparative column for 31 March 2025 uses the same method: £18,313.36 − £15,007.62 = £3,305.74 within one year, and £15,007.62 after more than one year. Lenders work interest out in their own way, so a real schedule will differ slightly. The lender's statement and repayment schedule are the source of truth: take the year-end balance and the interest from them, and use the arithmetic only to check the split. Because the last payment falls on 30 June 2030, no instalment falls due more than five years after 31 March 2026, so a small company's paragraph 55 total for this loan is nil.

What if a director used Bounce Back Loan money personally?

Bounce Back Loans were made on condition that they weren't used for personal purposes. Money a director takes that isn't salary, a dividend, an expense repayment or a repayment of their own loan to the company is a director's loan. It goes on the balance sheet and can mean extra tax.

The Insolvency Service lists "the loan being used for personal benefit" as misconduct, and says a director could be disqualified or ordered to compensate creditors (GOV.UK: Fact sheet: Bounce Back loans). In the accounts, any money a director owes the company at the year end goes on the balance sheet, and the company may have tax to pay if that director is also a shareholder (GOV.UK: Director's loans). The Bounce Back Loan itself stays in creditors as the company's debt to the lender, whoever spent the money. Our guide to director's loan accounts explains who owes whom, and the CT600A guide covers the section 455 charge on loans still outstanding after nine months.

How does Taxley handle a Bounce Back Loan in the accounts and CT600?

Taxley has separate lines for creditors falling due within one year and after more than one year, and an interest line that feeds the Corporation Tax computation. It recognises Bounce Back Loan accounts in a trial balance import. It doesn't split the loan for you: you enter each part from the lender's schedule.

Taxley (taxley.co.uk), UK online software that prepares and files the Company Tax Return (CT600) with HMRC and the annual accounts with Companies House, puts the two creditor figures on the balance sheet step. In the Advanced editor, "Creditors: amounts falling due within one year" lists loans and overdrafts among its examples, and "Creditors: amounts falling due after more than one year" mentions a long-term loan; Simple mode has the same two lines. Interest goes in "Interest payable" in the Advanced editor, or "Loan and overdraft interest paid" ("Loan and mortgage interest paid" for a property company) under Specialist adjustments in Simple mode, and micro-entity accounts show it within Other charges. For a trading company the computation deducts it in the trading profit; for a property company it treats it as a non-trading loan relationship debit and puts it in the right CT600 boxes.

A trial balance import recognises account names containing "bounce back", "BBL" or "CBILS" and suggests creditors due after more than one year for the whole balance, with a note that any part repayable within 12 months belongs in creditors due within one year. Move that part yourself. In the Advanced editor, when the balance sheet shows creditors due after more than one year, the secured debts note reminds you to describe any security. Taxley can't check the split against your lender's schedule, and it isn't tax advice. The fee is £39.95 with micro-entity accounts or £129 with small company accounts, including filing the accounts at Companies House once the return is paid and the accounts are finished. Take the 30-second check to see whether Taxley fits your company, or see the price for your company.

Frequently asked questions

Is a Bounce Back Loan taxable income for the company?

No. The money was borrowed and must be repaid, so it went on the balance sheet as a creditor, not into the profit and loss account. Corporation Tax on loans follows amounts recognised in profit or loss (CTA 2009 s.307), so only the interest charged affects taxable profit.

Can I deduct the whole monthly repayment as an expense?

No. Each payment is part interest, part capital. Only the interest is a deductible loan relationship debit; the capital part reduces the creditor. In the worked example, £3,725.88 paid in the year included £420.14 of interest and £3,305.74 of capital (HMRC manual CFM33070).

What changes if the company paused repayments under Pay as You Grow?

Less capital falls due in the paused months, so the within-one-year creditor is smaller and the after-one-year part larger. A pause lasted up to 6 months and could be used once (GOV.UK: Bounce Back Loan). Take the split from the lender's revised schedule.

Does a micro-entity need a note about its Bounce Back Loan?

No note is required for the loan itself. Regulation 5A of SI 2008/409 requires only the paragraph 57 note on financial commitments, guarantees and contingencies (SI 2008/409 reg 5A). The loan still appears on the balance sheet, split between items E and H.

What happens if the company can't repay its Bounce Back Loan?

The Insolvency Service says an unpaid loan may lead to an investigation of the company, even after it is dissolved, and misconduct can lead to winding up or director disqualification (GOV.UK: Fact sheet: Bounce Back loans). Speak to the lender early.

General information, not personalised tax or accounting advice.