Loaning money to yourself to avoid paying out dividends

[WTFH]

Well you and eek both said "not for your wife", so her being a director would make a difference

You can't make a directors loan to someone who isn't a director.

[pr1]

You can't make a directors loan to someone who isn't a director.

Which is exactly why I asked

Is there a reason you can't make your wife a director?

[WTFH]

OK, do you understand the difference between "Can't" and "Don't want to"?

There are very few reasons why a company can't make someone a director, but there are a multitude of reasons why a company might not want to make someone a director.

[Lance]

Well you and eek both said "not for your wife", so her being a director would make a difference

eh????
There is no tax on a DL (as long as it's full repaid within 9 months of company year end)
There is no monetary limit to a DL.
Any tax paid if the DL is not repaid in time is a company tax (32.5%).

So on what planet does having another director make a blind bit of difference to a DL?
Clue : it doesn't

[SuperLooper]

There is no tax on a DL (as long as it's full repaid within 9 months of company year end)
There is no monetary limit to a DL.
Any tax paid if the DL is not repaid in time is a company tax (32.5%).

Better to keep the loan below £10k to avoid BIK/interest charges, no? So smaller loans to multiple directors may make more sense overall.

[Lance]

Better to keep the loan below £10k to avoid BIK/interest charges, no? So smaller loans to multiple directors may make more sense overall.

I suppose if you want to borrow between £10k and £20k. Not sure if that is worth adding a director for though.

Maxing out 2 persons ISAs is £40k anyway.

[TheCyclingProgrammer]

Contrary to what everyone else is saying, you can loan money to your shareholder wife subject to the same rules as any other director's loans. Shareholders can have loan accounts too.

For the purpose of s455 a "director's loan" is really just a "loan to participator" and "participator" in this case includes directors and shareholders. Both loans would need to be repaid within 9 months of the financial year to avoid an s455 tax charge.

The BIK issue is a bit trickier if your wife isn't a director or employee and you should get advice from your accountant - I suspect that any BIK on the beneficial loan may be assessed as if it were loaned to you, therefore for the purposes of of working out the BIK you would need to calculate it on the total loaned to both of you. You could charge interest on the loans at HMRC rates to avoid a BIK charge, or you could declare the total loan as a BIK on your tax return.

I expect your accountant has explained to you the benefits of your shareholding wife also being a company officer?