Directors Loan (warning - potential newbie question!)

[chris79]

Disclaimer: This following question could be deemed 'newbie', please do not read any futher if you are offended by such questions.



Righty, I've had a look through previous posts using the search facility regarding Directors Loans, I can see that it's possible to borrow upto £5k from my company providing it's paid back within 9 months of company accounts? This is something which might be useful to me, so can anyone please help answer my following queries:-

1. I've read the term 'Directors loan account'. Is this referring to a ledger within my books? Or is it an actual bank account.

2. Is it as easy as just transferring up to £5k from my business account to my personal current account using online banking and recording this within my accounts software?

Thanks.

[Lewis]

Disclaimer: This following question could be deemed 'newbie', please do not read any futher if you are offended by such questions.



Righty, I've had a look through previous posts using the search facility regarding Directors Loans, I can see that it's possible to borrow upto £5k from my company providing it's paid back within 9 months of company accounts? This is something which might be useful to me, so can anyone please help answer my following queries:-

1. I've read the term 'Directors loan account'. Is this referring to a ledger within my books? Or is it an actual bank account.

2. Is it as easy as just transferring up to £5k from my business account to my personal current account using online banking and recording this within my accounts software?

Thanks.

1 It just needs to be recorded in books
2 Yes

But it is recommended you don't take a directors loan by most accountants.

[chris79]

Why is it recommended not to take one?

cheers.

[BrilloPad]

Disclaimer: This following question could be deemed 'newbie', please do not read any futher if you are offended by such questions.



Righty, I've had a look through previous posts using the search facility regarding Directors Loans, I can see that it's possible to borrow upto £5k from my company providing it's paid back within 9 months of company accounts? This is something which might be useful to me, so can anyone please help answer my following queries:-

1. I've read the term 'Directors loan account'. Is this referring to a ledger within my books? Or is it an actual bank account.

2. Is it as easy as just transferring up to £5k from my business account to my personal current account using online banking and recording this within my accounts software?

Thanks.

1. ledger
2. it is that easy

personally I never borrowed over year end - I believe it causes extra stuff in company accounts?
BP
Ps f**king newbie - why didn't you do some research first? Why dont you ask Denny? (more rant) etcetc.

[BrilloPad]

Why is it recommended not to take one?

cheers.

AFAIK it is only not recommended if over year end.

[r0bly0ns]

Why is it recommended not to take one?

cheers.

My accountant (one who frequents these forums) sees no problems with it and has advised us on it's use several times.

[chris79]

AFAIK it is only not recommended if over year end.

So to get round this can you just borrow it, pay it back a week before year end, then after year end, borrow another £5k?

[chris79]

Seems logical to borrow £5k and just pay it off a flexible mortgage, will save more interest than you would ever make in a good savings account after taxes etc.

[gadgetman]

Presumably there is some BIK implication to this?

[chris79]

Well from what I've read so far, it's not classed by the tax man as a BIK. What we choose to do with the loan is surely up to the individual in this case?