Gains made using Directors Loan

[northernladuk]

Am I the only one thinking if the OP is struggling with this bit

Let's say I take a directors loan of 15k and then invest that in crypto. If that crypto gains 5k in value and is realised/sold, what position would that leave me (and my company) in in terms of tax obligations?

Then they shouldn't really be playing with high risk investments. Understanding who's money is who's using a directors loan isn't really rocket science.

[ryan11]

What makes it worse is that I'm a CIMA qualified accountant too!

I admit my question makes me sound a lot more 'dim' than I actually am, however I probably didn't word it as well as I should have. Your choice of words is slightly on the condescending side but I guess I'm fine with that - after all It's a public forum and you're free to talk to people in a way that you wouldn't if you were talking to them in person.

Cheers

[jamesbrown]

What makes it worse is that I'm a CIMA qualified accountant too!

I admit my question makes me sound a lot more 'dim' than I actually am, however I probably didn't word it as well as I should have. Your choice of words is slightly on the condescending side but I guess I'm fine with that - after all It's a public forum and you're free to talk to people in a way that you wouldn't if you were talking to them in person.

Cheers

Don't mind nluk, he's just tough on n00bs because we see a lot of the same posts repeatedly, many from folks that can't be bothered to do the minimum of research themselves, but you seem nice enough, so I wouldn't sweat it. Notwithstanding some niche situations, you'll probably find, as you dig into this further, that personal investments without a DL or pension contributions via YourCo are the way to go. There are quite a few threads on here along the same lines, albeit not generally involving a specific question about a DL (but I would avoid that strategy altogether because you don't want your investment decisions clouded by DL timelines), and they generally offer the same or similar advice.

[northernladuk]

What makes it worse is that I'm a CIMA qualified accountant too!
I admit my question makes me sound a lot more 'dim' than I actually am, however I probably didn't word it as well as I should have. Your choice of words is slightly on the condescending side but I guess I'm fine with that - after all It's a public forum and you're free to talk to people in a way that you wouldn't if you were talking to them in person.

Unfortunately we get a lot of questions like this and in many cases the person can be as dim as they sound. I see text on a screen it tells me the person doesn't understand the fact that the money from a DL becomes your personal money (albeit for a short period) so they are treated as personal gains. It's as simple as that. Directors loans are very poorly researched and understood as well so best avoided by most, we get our fair share of DL screw up posts as well.

Sadly, as worded, your post falls right in to these middle of these types of posts and the general advice is to just walk away. If the poster can't be bothered to research DL's and the fall out then they shouldn't be messing with them. There is often a back story to this we have to drag out the OP which opens up whole other cans of worms, particularly when crypto is involved as well.

It was how your post was worded and I'm only asking the question to help although I do admit it rarely looks like it on the surface.

Apologies if I'd made incorrect assumptions but if someone doesn't understand how personal money is treated after a DL I'll always be asking questions about the whole situation, not just the direct question asked.

[Eirikur]

The number one stupidest financial thing to do. Investing (gambling) with borrowed money

[Lance]

The number one stupidest financial thing to do. Investing (gambling) with borrowed money

I'll go one better.
Using borrowed money to try and win back money lost on earlier borrowings.

[mallisarealperson]

The number one stupidest financial thing to do. Investing (gambling) with borrowed money

Is that not part of every Mafia movie ever made. Resulting in the guy getting his legs broken or worse.

[cwah]

The number one stupidest financial thing to do. Investing (gambling) with borrowed money

Actually when you take a mortgage, you invest with borrowed money. And lot of it. So not all borrowed money is bad.

[lecyclist]

Is it actually possible to cash out any significant amount from crypto? it's easy to buy it, but AFAICS, Extremely difficult to cash it.

I would have thought the same about a year ago. There is the argument that since cryptocurrency is the future of money, and you won't need to cash out, the question becomes irrelevant. Although you may need to go down a rabbit hole to come back with this conclusion.

In practical terms, as long as you use a major exchange (e.g. Binance, Coinbase or Kraken) cashing out is simple.

[Eirikur]

Actually when you take a mortgage, you invest with borrowed money. And lot of it. So not all borrowed money is bad.

I worked with a guy who took out a mortgage on his house in the late 90's to buy stock in a tech company, then the dotcom bubble bursted and he lost his house