Using a personal credit card for company expenses

[ittony]

The thing you have to avoid is for the company to satisfy a personal debt of the director (i.e. company directly paying a personal credit card). If that happens, you could be liable to NIC on the amount. Tax and NIC rules are not the same, under tax rules, the payment of the liability would be covered by the counter-liability of the amount owed by the company to you, but there is no likewise "setoff" under NIC rules. The PAYE inspectors love this kind of thing as they get to assess some NIC which justifies their existence.

Really!? That's insane. So if I balance transfer from the business account to my personal current account and then from my current account to my credit account, that's okay, but I'm in trouble if I balance transfer directly from the business account to the credit account? I'd have thought the two scenarios were exactly equivalent. If the current account to credit account transfer happens first, leaving the current account in debit then the business account to current account transfer pays that off, I can't even conceive of any theoretical different at all.

On a similar note, I was just about to send a company cheque off to pay for my PCG membership. Would that fall foul of this rule too?

[Bluebird]

Really!? That's insane. So if I balance transfer from the business account to my personal current account and then from my current account to my credit account, that's okay, but I'm in trouble if I balance transfer directly from the business account to the credit account? I'd have thought the two scenarios were exactly equivalent. If the current account to credit account transfer happens first, leaving the current account in debit then the business account to current account transfer pays that off, I can't even conceive of any theoretical different at all.

On a similar note, I was just about to send a company cheque off to pay for my PCG membership. Would that fall foul of this rule too?

You shouldn't "baclance" transfer anything from Ltd Co to Personal UNLESS you justify it as either:

a, Salary
b, Dividend
c, reimbusement of a personal outgoing that the company will pay

As a balance transfer usually is for more than one transaction, you have to be able to legitmately claim that all items are business expenditure.

[Bluebird]

PCG can be claimed as a business expense - let your co pay for it.

[ittony]

HSBC do a full blown debit card on their business accounts, paid off automagically by monthly direct debit. Go look on their BB website for details. May have to build a bit of credit history before you qualify, although I got mine fairly well straight away.

Unfortunately their debit card appears to be Maestro-based which is pretty useless for ordering anything from outside of Europe.

As for building up some credit history, surely that's a catch 22 situation?

[ittony]

You shouldn't "baclance" transfer anything from Ltd Co to Personal UNLESS you justify it as either:

a, Salary
b, Dividend
c, reimbusement of a personal outgoing that the company will pay

As a balance transfer usually is for more than one transaction, you have to be able to legitmately claim that all items are business expenditure.

As I explained initially, these are purely business costs paid from my personal credit card to suppliers who will only take Visa or Mastercard which my business account does not offer to start-ups.

[ittony]

PCG can be claimed as a business expense - let your co pay for it.

It was the method of paying for it I was worried about. Can I send a business cheque made payable to the PCG or do I have to route the money via my personal current account as WHA explains I have to do in order to get money into my credit card account without the National Insurance police having kittens.

[malvolio]

Unfortunately their debit card appears to be Maestro-based which is pretty useless for ordering anything from outside of Europe.

As for building up some credit history, surely that's a catch 22 situation?

It's a Mastercard - never stopped me buying anything from anywhere. As for credit history, they want to see some cashflow through the business account - couple of months at the most.

[malvolio]

It was the method of paying for it I was worried about. Can I send a business cheque made payable to the PCG or do I have to route the money via my personal current account as WHA explains I have to do in order to get money into my credit card account without the National Insurance police having kittens.

It's a business expense so the business pays for it.

Remember, and be very clear about it, YourCo money and your money belong to two entirely different legal entities, you as director and you as you. Never, ever mix them up. So paying your CC bill is your problem and must be done with your money; that money may have come to you as a salary, dividend or expense claim, but offloading your debts onto YourCo is neither clever nor legal.

[ittony]

It's a business expense so the business pays for it.

Remember, and be very clear about it, YourCo money and your money belong to two entirely different legal entities, you as director and you as you. Never, ever mix them up. So paying your CC bill is your problem and must be done with your money; that money may have come to you as a salary, dividend or expense claim, but offloading your debts onto YourCo is neither clever nor legal.

Hi Malvolio. Thanks for all you help on this, especially the HSBC info.

I'm crystal clear on the company money and personal money belonging to two different legal entities, it would appear to be a very simple concept. What I don't understand is the difference between on one hand transferring money from MyCo to my current account (as the result of a valid business expense claim) and on the other hand transferring money from MyCo to my credit card account (as the result of a valid expense claim).

If we use the example of paying for PCG membership, it seems so far we have:
PCG <-- my credit <-- my current <-- MyCo = GOOD
PCG <-- my credit <-- MyCo = BAD
PCG <-- MyCo = GOOD

Where's the sense in that?

[malvolio]

It's because the direct payment of a debt by YourCo could be seen as an attempt to bypass normal payment channels and hence evade some taxation, which is illegal. By routing money through the correct channels, and so by providing a clean audit trail, that won't arise.


99.9% of the time it won't matter a damn, but it's the 0.1% you have to guard against, so stick to the rules. Boring, but necessary.