Buying a Property question

[TheCyclingProgrammer]

So you buy the property personaly using a directors loan. What happens after 9 months after company year end when u need to pay it back and your money is locked away?

You don't have to pay it back in that timeframe if you've got enough cash in the company to cover the s455 tax. You'll get the money back eventually once the loan is repaid.

[ChimpMaster]

You don't have to pay it back in that timeframe if you've got enough cash in the company to cover the s455 tax. You'll get the money back eventually once the loan is repaid.

Not sure I'd advise paying s455: it's 25% of the loan amount which can be a substantial sum, and won't prove easy/quick to get back from HMRC.

Best to only take a loan amount that you know you can repay before 9 months past the company year-end date.

[TheCyclingProgrammer]

Not sure I'd advise paying s455: it's 25% of the loan amount which can be a substantial sum, and won't prove easy/quick to get back from HMRC.

I'm aware of that, but like I said if YourCo has significant cash reserves it shouldn't have any effect on your cashflow. They money will be re-paid 9 months after the tax year in which the loan is re-paid. As long as you're aware of that then its not necessarily a big deal.

Assuming cashflow isn't an issue then the most important thing to watch out for is paying the correct amount of interest (or BIK tax, but interest is the best approach I think) on the loan if over £10k and I believe that strictly speaking a shareholders meeting is required for loans in excess of £15k (but a rather trivial point for a one man or family owned business).

[SandyD]

You know what, forget it.

I asked a question here as I thought I'd get some professional respectable answers and advice.

Forget it.

:

[No2politics]

I'm aware of that, but like I said if YourCo has significant cash reserves it shouldn't have any effect on your cashflow. They money will be re-paid 9 months after the tax year in which the loan is re-paid. As long as you're aware of that then its not necessarily a big deal.

Assuming cashflow isn't an issue then the most important thing to watch out for is paying the correct amount of interest (or BIK tax, but interest is the best approach I think) on the loan if over £10k and I believe that strictly speaking a shareholders meeting is required for loans in excess of £15k (but a rather trivial point for a one man or family owned business).

I didnt realise you got the tax refunded when you repay the loan. Obviously makes a huge difference.

Suspect accountants tell you not to bother as its more work for them

[Murder1]

EDIT: with Osbourne's tax rape on individual BTL owners, you might want to research buying the property entirely under the company name. This is more for future-proofing under a more efficient tax shelter, but depends on your long term plan with regards to property.

How ironic that this "might" be the better option going forwards when the consensus has historically been to take the money out of the business and buy it personally.

[TheCyclingProgrammer]

I didnt realise you got the tax refunded when you repay the loan. Obviously makes a huge difference.

Suspect accountants tell you not to bother as its more work for them

Yes. There's nothing wrong with taking director loans over longer periods of time. The charge is there to stop directors taking big loans and never paying them back.