Paying interest to your own company

Assalamu Alaikum wa Rahmatullahi wa Barakatuh,

What is the ruling on paying interest to your own business?

For example, if I loan £50,000 from my business (1-person business) to myself personally, upon returning the loan I would need to pay 2% interest, so would end up repaying £51,000 total.

Is this permissible as it will be going back to my business that I own fully?

Note that this extra £1,000 would be a profit for the business and would incur corporation tax of 19%.

Thank you

1 Like


May Allah bless you.

Please see link below:

Kind regards

JazakAllah Khair Mufti Billal for the response,

Just to clarify, the fact that the tax authorities will benefit from this interest paid to yourself (via taxing it as “profit”) still does not make it impermissible ?

I.e. if I loaned myself £100,000 I’d have to pay back £102,000 to my company, of which HRMC would take 19% of the £2,000 profit (£380)