Originally posted by DirtyDog
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Directors Loan and Company Expenses
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Update time.....
My accountants say that the £5000 expenses does not reduce my Directors Loan balance, because the £5000 reduces the dividends payable to me as a Director. My weekly drawings were made up of Dividend amounts (the greater portion, because of the tax implications) and the smaller amount was salary (and a lower PAYE tax liability).
Basically my accountants say that it is either dividends or expenses, I don't get both as a Director. I thought I got the expenses as the employee? Or is it I get the expenses as a Director? Or does it make a difference? They re-worked my last 5 remittances - thats the documents they issued to me each week showing my weekly amount to draw, based on dividends and salary. These re-worked remittances showed that I was entitled to £1030 additional funds from the company and served to reduce the DL by £1030. That £1030 represents the 20% corp tax relief though, and not the 100% of the £5k expenses. So the ins and outs of dividends etc. why it was done that way and not another way is slightly irrelevant at this point in time. I'm faced with a £10k liability to my company (which is being closed down as I ceased trading at the end of October this year) to be paid by Aug 2014 when everything I have been told by you guys, and another accountant says that the £5k expenses should reduce my DL by £5k. I am typing the letter of disengagement right now....Comment
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I’m guessing that there are no retained earnings in the company after the dividend?
By including additional expenses, the amount of profit in the company which can be distributed as dividends is reduced. The amount credited to the director’s account in respect to dividends is therefore reduced by the to the new retained earnings figure but then increased by the expenses figure – the difference in this case would be the corporation tax saving as that can still be taken as a dividend.
I hope this makes sense…
CraigComment
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Originally posted by Craig at Nixon Williams View PostI’m guessing that there are no retained earnings in the company after the dividend?
By including additional expenses, the amount of profit in the company which can be distributed as dividends is reduced. The amount credited to the director’s account in respect to dividends is therefore reduced by the to the new retained earnings figure but then increased by the expenses figure – the difference in this case would be the corporation tax saving as that can still be taken as a dividend.
I hope this makes sense…
CraigComment
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Originally posted by zedmartin View PostBasically my accountants say that it is either dividends or expenses, I don't get both as a Director. I thought I got the expenses as the employee? Or is it I get the expenses as a Director? Or does it make a difference?
Originally posted by zedmartin View PostI'm faced with a £10k liability to my company (which is being closed down as I ceased trading at the end of October this year) to be paid by Aug 2014
Originally posted by zedmartin View Postanother accountant says that the £5k expenses should reduce my DL by £5k.
Originally posted by zedmartin View PostI am typing the letter of disengagement right now....Originally posted by MaryPoppinsI hadn't really understood this 'pwned' expression until I read DirtyDog's post.Comment
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Originally posted by zedmartin View PostSo basically, I owe £10k. No recriminations, please
And I assume that includes the interest charge at a minimum of 4%.Originally posted by MaryPoppinsI hadn't really understood this 'pwned' expression until I read DirtyDog's post.Comment
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Originally posted by DirtyDog View Post£9k - don't forget that £1030
And I assume that includes the interest charge at a minimum of 4%.'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by northernladuk View PostDivi out the yearly allowance as fast as possible and put it somewhere the money can work for you and draw down from that. Why leave it in an accountant paying zero interest for the sake of doing it monthly. I can't get my head around why people do this at all.
interested in hearing how you make the money work for you? I am aware of 'high' risk ventures which could give a return but you could end up losing. If we assume that most people's divi's are used as living costs on a month by month basis, then a venture is likely to need to be low risk, higher return than leaving in co account and immeditaely accessible (or at least within that year). On that criteria, it would probably rule out bonds, ISAs, shares.
I'm monthly at the moment, but like the idea of taking annually and getting a little more.Comment
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Originally posted by youngguy View PostHi NLUK
interested in hearing how you make the money work for you? I am aware of 'high' risk ventures which could give a return but you could end up losing. If we assume that most people's divi's are used as living costs on a month by month basis, then a venture is likely to need to be low risk, higher return than leaving in co account and immeditaely accessible (or at least within that year). On that criteria, it would probably rule out bonds, ISAs, shares.
I'm monthly at the moment, but like the idea of taking annually and getting a little more.
Even sticking it into a decent cash ISA is going to pay more than your business account is going to pay.
Virgin Money easy access savings account pays 1.5% at the moment, which is more than my company account was paying.Originally posted by MaryPoppinsI hadn't really understood this 'pwned' expression until I read DirtyDog's post.Comment
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