Contractor with offset mortgage

[Tilamok]

Hello All

I apologies if this has been answered before but I would appreciate any feedback.

I currently have an offset mortgage.
I will start contracting soon and will have money in my business account.

As I understand it, if I withdraw money from the business a/c, monies are due to the tax and vat offices.

My question is :- Can I either
1) Move money from my business a/c to my mortgage a/c without paying immediately any monies to tax/vat. Then just before the end of the tax year, pay as a lump sum any monies due to tax/vat???

I'm not trying to scam anyone, just trying to delay payment to tax/vat so that I pay less interest on my mortgage

2) Another way to do point 1 above, is to get a business account that can gives a no-interest loan that matches the balance in the business account. Does anyone know of such business accounts?


Many Thanks

[b0redom]

You don't pay VAT when you remove money from the company, you (usually) pay it quarterly on your sales.

The company money belongs to the company, not to you, so no you can't just move it around willy-nilly.

Various methods of doing what you suggest have been mooted, but as far as I know the fact that it's not being done by lots of people means they are potentially quite dodgy - talk to your accountant.

"I can appreciate that many might say that contractors should not be money savers but I'm in a bit of a pinch at the moment."

Are you really sure you should be starting contracting now then? I presume you're moving from a permie role? It's not for the faint of heart, or a get rich quick scheme - it's a lifestyle choice, and you may have weeks / months of voids where you're not working.

[TheFaQQer]

My question is :- Can I either
1) Move money from my business a/c to my mortgage a/c without paying immediately any monies to tax/vat. Then just before the end of the tax year, pay as a lump sum any monies due to tax/vat???

I'm not trying to scam anyone, just trying to delay payment to tax/vat so that I pay less interest on my mortgage

To take money out of the company, you need either a directors loan or to declare a dividend. Dividends can only be paid out of profit. If you take out a loan which is too large, then it counts as a benefit in kind and you pay tax on it. The loan also needs to be repaid.

2) Another way to do point 1 above, is to get a business account that can gives a no-interest loan that matches the balance in the business account. Does anyone know of such business accounts?

No. Can't think of why anywhere would be offering a 0% loan.

I can appreciate that many might say that contractors should not be money savers but I'm in a bit of a pinch at the moment.

You need to learn that the money in the company is not yours, regardless of how tight the pinch is. If you confuse the two, then you are going to end up in all sorts of bother.

If you have money in the company account which is profit, then declare a dividend and stick the money in your offset mortgage. Then draw against that over the year as you need to, rather than having salary.

Also - if you can't save money, contracting probably isn't the answer, to be honest. If things are tight now, how will they be when the first contract ends and you are out of work for 6 months before another one comes along?

[Tilamok]

Thanks for the replies

I have removed the "pinch" because this is a secondary issue and losing focus on what I was really after.

[prozak]

it is not your money.

you either need to

1. pay a salary
2. pay a dividend
3. loan the money to the director (bik implications)

[northernladuk]

You already asked this question once in one of your other threads below..

http://forums.contractoruk.com/gener...tml#post832753

What is more annoying is that you were also told in that thread this has been done a load of times so use the search. Instead you post it twice??

[Tilamok]

You already asked this question once in one of your other threads below..

http://forums.contractoruk.com/gener...tml#post832753

What is more annoying is that you were also told in that thread this has been done a load of times so use the search. Instead you post it twice??

Sorry
Could u please delete the thread if u can

Thanks

[Wanderer]

1) Move money from my business a/c to my mortgage a/c without paying immediately any monies to tax/vat. Then just before the end of the tax year, pay as a lump sum any monies due to tax/vat???

Blah, it's been discussed at great length here. Try doing a search for "Director's loan".

Presuming you are the only shareholder, it's your company so you can do what ever the hell you like with it. If the company makes an interest free loan then you pay tax on the benefit in kind. If you get investigated then they may seek to treat the loan as salary (especially if the "loans" are taken out weekly/monthly) and whack you with a big PAYE/NI bill. Read all about director's loans here: HM Revenue & Customs: Directors' loan accounts and Corporation Tax explained

Ask your accountant for advice, though they will probably tell you not to do it because people have a habit of clearing out the company's bank account, spending the money and then having none left when it comes to pay the tax man in a year or so, thus getting themselves in all manner of tulip and generally upsetting Hector.

[Tilamok]

Blah, it's been discussed at great length here. Try doing a search for "Director's loan".

Presuming you are the only shareholder, it's your company so you can do what ever the hell you like with it. If the company makes an interest free loan then you pay tax on the benefit in kind. If you get investigated then they may seek to treat the loan as salary (especially if the "loans" are taken out weekly/monthly) and whack you with a big PAYE/NI bill. Read all about director's loans here: HM Revenue & Customs: Directors' loan accounts and Corporation Tax explained

Ask your accountant for advice, though they will probably tell you not to do it because people have a habit of clearing out the company's bank account, spending the money and then having none left when it comes to pay the tax man in a year or so, thus getting themselves in all manner of tulip and generally upsetting Hector.

I think that you have the million dollar answer
As long as I'm disciplined and don't spend the money, I should be fine.
Thanks

[escapeUK]

I dont feel this question has ever been satisfactorily resolved.

We had several "you cant do that" opinions mostly from northernthing who has an opinion on most things he knows nothing about, and others who like to have £20k sat in company funds while paying interest on £20k on their mortgage.

We also had another guy say yes you can, you just need the proper documentation.