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Salary Advance

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    Salary Advance

    Dear all,

    My wife is an employee of our limited company (me being the sole director) earning £790 per month salary. She needs 5 month's of salary in advance (total £3950). I am ok to pay her in advance from the company bank account. Accountants are ok too but they said they will run the payroll on monthly basis as usual (but wife won't get any salary for next 5 months). I am not intending to charge her any interest/fee. Is this something ok to do? Would I be in breach of any HMRC rules?

    Many thanks in advance!

    #2
    HMRC advice says it is a loan so DR employee loan account when payment is made and then credit the loan account each month with what would have been the salary payment.

    https://www.gov.uk/hmrc-internal-man...anual/eim42280

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      #3
      you could take a directors loan and give it to her
      See You Next Tuesday

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        #4
        The accountants might say they are OK with it but haven't told you how they'll really treat it which I think is a bit of a cop out. They really should have explained they'll treat it as a loan in the backgroun to give you a better idea what's going on than letting you think it's OK. Seems a very strange way to service their clients that.

        If you don't trust your accountants to the point you have to come ask a random set of contractors I'd suggest swapping accountants.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          This is pretty standard double entry book keeping. Just let the accountant handle it. It is simply a loan without interest, and the loan just enables them to balance the books. The loan is paid off over several months.
          I'm alright Jack

          Comment


            #6
            Originally posted by Lance View Post
            you could take a directors loan and give it to her
            I already have taken it early this year so don't want to use that option

            Comment


              #7
              As others have said, it's a straightforward loan from the company. Each month where she doesn't get a salary in actual cash, the wage on paper is credited against the loan advanced. No issues to doing this if you need to go ahead with it. Let the accountant deal with the accounting!

              Comment


                #8
                Originally posted by northernladuk View Post
                If you don't trust your accountants to the point you have to come ask a random set of contractors I'd suggest swapping accountants.
                True. In the process of changing them as soon as company year ends.

                Comment


                  #9
                  Originally posted by Geekman View Post

                  True. In the process of changing them as soon as company year ends.
                  no point. They'll take months to do the year end. You just need to accept it's gonna cost you to move.
                  See You Next Tuesday

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                    #10
                    Originally posted by Lance View Post

                    no point. They'll take months to do the year end. You just need to accept it's gonna cost you to move.
                    Some firms don't charge for catch up fees if you swap mid year so it shouldn't cost any extra.

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