Does Director Loan Account and Dividends go hand in hand?

[ASB]

"If the business account have distributable profits of 10000 pounds, and has paid director 10000 pounds as director loan. Since company does not have any more money in the account now, can it declare dividends of 10000 pounds to clear off the director loan?"

From that information nobody could say for certain yes or no.

If you have retained earnings of 10,000 you can do as you wish. If you don't then you can't. The latter looks more likely from the information given.

[tyut4669]

Is P11D applicable if I payback the director loan within the accounting period?

If I payback the director loan (way more than 5000 mark) with the interest within the accounting period, does P11D still apply along with the payment of employer class 1 benefit NI?

[Danielsjdaccountancy]

If I payback the director loan (way more than 5000 mark) with the interest within the accounting period, does P11D still apply along with the payment of employer class 1 benefit NI?

No, you will have repaid the loan in full provided you do this in the same personal tax year.

[thunderlizard]

I suppose so, but like most I pay expenses and salary, then treat 79% of what's left as available to pay as a dividend. I guess there may be personal reasons why you'd need the extra short term and dip into your CT and VAT money, but it seems strange to operate like that all the time.

I don't think like that. Dividends decided and declared once a year, when net profit's been calculated and I know how much to keep and reinvest, and how much can be paid out to shareholders. Whereas if you need personal cash for a short-term emergency, a director's loan can be taken at the drop of a hat, with minimal paperwork, and of course isn't linked to shareholding.