Directors Loan (warning - potential newbie question!)

[tim123]

Why is it recommended not to take one?

cheers.

The reason why it's not recommended to take one, is because it's too easy to make a mistake in your normal day to day accounting, accidently withdraw an extra 10 pounds from your directors account and end up with a loan of 5010 which generates a BIK that is taxable.

If you take a loan of more than 5K, the BIK is the WHOLE amount, not just the excess.

I've said it before, but that's not going to stop me saying it again. If you can't cover your normal expenses without maxing out the money you withdraw from the company each month, you do not have enough savings to live the life of a contractor.

tim

[chris79]

Cater Allen have good rates. I get over 4% from my business current account (their Reserve account). www.caterallen.co.uk

Cool, I see they pay 5% on £500k+, I think this meets my needs!

http://www.caterallen.co.uk/Interest...lt.aspx?pid=10


No seriously, thanks I'll look into this, looks good. Another newbie question, I *CAN* move funds from my Business current account to another location for the purpose of getting a better rate yes?

[ASB]

Cool, I see they pay 5% on £500k+, I think this meets my needs!

http://www.caterallen.co.uk/Interest...lt.aspx?pid=10


No seriously, thanks I'll look into this, looks good. Another newbie question, I *CAN* move funds from my Business current account to another location for the purpose of getting a better rate yes?

You can have as many accounts as you want. Where you want. Just need to keep track of them from an accounting perspective.

[malvolio]

Cool, I see they pay 5% on £500k+, I think this meets my needs!

http://www.caterallen.co.uk/Interest...lt.aspx?pid=10


No seriously, thanks I'll look into this, looks good. Another newbie question, I *CAN* move funds from my Business current account to another location for the purpose of getting a better rate yes?

Provided you remember whose money it is, and that all such transactions are fully auditable. Forget that detail and the average term is 4 years for fraud or 8 years for evasion, depending on what you do....

[chris79]

Cool cheers, that's all my questions answered! Thanks for all your help.

[Hex]

I use Alliance and Leicester for my business savings. Rate is currently 4.43% AER up to £50K and 5.16 AER up if you have more than 50K in it. You can use internet banking and it comes with a sort code and account number. I get the agents to credit it directly rather than credit my current account and I use it for all electronic transfers.

One sneaky thing they do though is to create a new "issue" number of this account from time to time. The old issue numbers then tend to get lower rates than the newer ones.

The account is their Business Instant Reserve Account.

I've also used a Northern Rock Business account which was a postal account and paid good rates. I'm sure you'll have your own opinion on them.

[chris79]

Just checked out Northern Rock and rates are excellent, can be done electronically too so looks like I'll stick my money in there then! Cheers.

[NotAllThere]

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

I find the disclaimer highly patronising, totally uncalled for, and therefore offensive. Really.

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.

The former.

. 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?

Yes. But the strictly, the loan account is for you to loan money to your company, not vice versa.

[chris79]

The disclaimer was intended as a light hearted joke given recent events on this forum which included myself.

Friday. Chill.

[crack_ho]

I've also used a Northern Rock Business account which was a postal account and paid good rates. I'm sure you'll have your own opinion on them.

I like this. Getting the government to pay a good interest rate on your corporation tax due.