Decent level of retained profit, dividend timing?

[Wanderer]

So I take the loan and use it for my deposit. I've still got to pay that loan back. How do I do that without declaring a dividend and going into the highest tax threshold anyway?

You could take it in a subsequent tax year when you (or your spouse) don't earn as much and you could avoid paying higher rate tax. You could also close the company with a MVL and take it as a capital distribution which would lower your tax rate.

Alternatively, you can just pay it back with interest (currently 4% which becomes company profit and is paid back to you minus tax) so you've effectively had a cheap loan.

I'd only recommend doing it if you have a flexible mortgage though....

[TheCyclingProgrammer]

You could take it in a subsequent tax year when you (or your spouse) don't earn as much and you could avoid paying higher rate tax. You could also close the company with a MVL and take it as a capital distribution which would lower your tax rate.

Alternatively, you can just pay it back with interest (currently 4% which becomes company profit and is paid back to you minus tax) so you've effectively had a cheap loan.

I'd only recommend doing it if you have a flexible mortgage though....

As long as there is enough retained profit in the company, we pay enough regular dividends to take me up to the higher rate threshold. This covers the cost of living wih money to spare, but nowhere near enough to cover repaying the loan.

I can't MVL and take the capital unless I intend to cease tradin or start a different business (or return to full time work). Well, I could, but it would be taking a chance with TIS rules. I'd rather not have that hanging over me. I know some people do this frequently, but it's not for me.

So that just leaves the cheap loan option, paid back with interest over a longer period of time. I admit I haven't fully investigated this route, although my accountant said he wasn't a big fan of it, due to the s455 tax issue.

[Wanderer]

So that just leaves the cheap loan option, paid back with interest over a longer period of time. I admit I haven't fully investigated this route, although my accountant said he wasn't a big fan of it, due to the s455 tax issue.

Yes, it would only ever be a cheap loan in your particular situation - you would have to pay it back within 9 months of the end of the company year too. If you have a flexible mortgage then this may be of value or if your circumstances change (ie lower income) in the next personal tax year then you might save tax too.

I imagine that some directors take loans and then find that they can't pay them back which will give the accountant a headache so I can see why accountants don't promote it...

[ASB]

tcp, havent reviewed the entire thread. But it may be worth considering taking some this year, paying the extra. And some next year. Reason for this is the possibility of the gap between the 40 and 50 percent bands narrowing and thus the possible risk of paying more if ypu take it all out in one go.

also may be worth considering upping the ohs stake depending on view on income shift in order to use more of her lower rate alllwance.

Personally I would be inclined to take the risk. Downside being you get taxed on it which is what would happen anyway.