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MVL - Outstanding Directors Loan - s455

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    MVL - Outstanding Directors Loan - s455

    I will very soon be beginning the MVL process, and I have an outstanding DLA of around £20k. I borrowed some money from the company about 3 years ago, and have slowly been paying it back, but there is still ~£20k remaining. The company paid s455 tax of around £10k when I borrowed the money (or soon after), which I believe should be returned when the loan is paid back.

    There will be around £80k cash in the company at the time of MVL, no other assets apart from some computer equipment. I have some other personal income, which limits the amount of dividend i can withdraw while staying in the basic rate band.

    So i have 2 main queries:

    1. Should I pay the company back the £20k before liquidation? Or use Distribution in Specie? My accountant has essentially said to me "its up to you". I am rather confused as to how the DiS actually works. The simplest approach would be for me to pay it back, but is there any benefit in using DiS? Is the net result the same?

    2. In either case, how does the refund of the s455 tax work?

    Thanks in advance
    Last edited by JPL; 3 January 2021, 16:26.

    #2
    I'm sure we've covered this. Check the search.

    In google type in (keywords) site:contractoruk.com.com/forums

    Try MVL loan as keywords.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      See https://www.contractoruk.com/forums/...rawn-loan.html - it shouldn't be a problem but adds hassle so will cost more and so MVL firms may not do it.
      merely at clientco for the entertainment

      Comment


        #4
        3rd option.
        Raise a £20k dividend toute suite to pay the loan off and carry on as planned.
        See You Next Tuesday

        Comment


          #5
          Originally posted by Lance View Post
          3rd option.
          Raise a £20k dividend toute suite to pay the loan off and carry on as planned.
          Not probably an option given

          I have some other personal income, which limits the amount of dividend i can withdraw while staying in the basic rate band.
          merely at clientco for the entertainment

          Comment


            #6
            MVL - Outstanding Directors Loan - s455

            Originally posted by eek View Post
            Not probably an option given
            It’s still an option. Just one that the OP dl doesn’t want to do.

            This is a bit of a first world problem though....
            “I earn too much money to be able to tax efficiently take more money that would allow me to easily avoid more tax.”

            Quite how you end up with years of out standing director loan when at, or near the higher rate tax band is beyond me.
            See You Next Tuesday

            Comment


              #7
              Originally posted by Lance View Post
              It’s still an option. Just one that the OP dl doesn’t want to do.

              This is a bit of a first world problem though....
              “I earn too much money to be able to tax efficiently take more money that would allow me to easily avoid more tax.”

              Quite how you end up with years of out standing director loan when at, or near the higher rate tax band is beyond me.
              It's not a sane option though when you can find MVL companies that will handle the process for you so that you only pay 10% tax on the money not 27.5%

              As for why you would have a large outstanding loan, interest rates are low so there is zero incentive to pay it back once the tax is paid.
              merely at clientco for the entertainment

              Comment

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