Directors Loans

[DaveB]

Perhaps that's because it isn't a tax law?

The law is that if the Directors Loan account is in debit, ie the director has borrowed money then it has to be repaid within 9 months of year end.

If it is not then BIK taxation becomes payable on it.

If it is not repaid and is in excess of £5000 then the company has to pay CT on it as well.

Technically it is illegal for the account to be more than £5000 in debit but since it requires a complaint from the shareholders to instigate an investigation in practice this never happens and this is the part that is rarely enforced.

Long long and the short is that unless you have a desperate need for cash and can't get it out of the co. any other way then a directors loan is more hassle than it is worth. If this is the case then you are probably screwed anyway.

[NotAllThere]

Still can't see the HMRC telling you its OK if it's illegal.....

Given their general level of incompetence, I can easily see it. Compare and contrast with advice about identity checks, and making copies of your passport.

I have done it myself before, under the advice of my accountant.

Sure, and I've done it also. Also on advice of my accountant. That's why I used the word "technically". Though never above £5000 per director.

Though you should be aware, as you can fall foul of the nine-months' rule, as I once very nearly did. The consequences are annoying.

[the average man]

No.

And if you were investigated and they checked your bank statements, they'd query it, you'd give your answer, and they'd move on.

So, why did you transfer the money, and why do you think you were wrong to do so? You could convert it to a salary payment or a dividend.

someone above said to write a cheque to yourself. I got the impression I couldn't do just a straight forward transfer? (nothings str8 forward to me when it comes to tax etc.)

Also I was going to then transfer the unpaid tax money into a personal savings account which I can see is a no no err now

[monkeyBoy32]

Kind of on-topic: Someone earlier mentioned company savings accounts - is it ok to just move money from your business current acc to your business savings acc? Or do I need to do anything else? Presuamably my accountant needs to know but what else needs to be done?

[r0bly0ns]

Yep, just move it, nope no need to tell the accountant.

Well not our accountant anyway, he just wan'ts to know the total money the company has, he recomends which bank account's to put it inot but leaves that up to us.

[DaveB]

Kind of on-topic: Someone earlier mentioned company savings accounts - is it ok to just move money from your business current acc to your business savings acc? Or do I need to do anything else? Presuamably my accountant needs to know but what else needs to be done?

No need to tell the accountant about it and you can move it around as much as you like as long as it is all in the Co. name.

The only thing to keep track of is interest earned as that counts as profits and is liable for CT.

[NotAllThere]

My accountant reconciles bank statements against the accounts, to help ensure accuracy, so he sees all my movements.

lucky him!

[Bluebird]

woops! I just transferred some money into my current account

I've transferred it back into my business account so hopefully shouldn't have been out of the account for longer than 24 hours.

does my accountant have to send my bank statements to the taxman???

you can transfer money between the Co a/c and your personal a/c providing you account for it and what it represents.

You Co & You are totally seperate legal entities - any transfer of funds between the 2 has to be for some reason and that reason usually has tax implications either for your co or you personally.

[Maxamus]

my accountant said to me that any loan made to the director for under 5k (i took out 2k) should be paid back before the companys year end. He never said anything about the 9 month rule.

[exbrm]

Director's loan account

Why all the fuss?
I am told to just draw whatever and it will be sorted out at the year end.
You all seem a bit too twitchy - why?