Reply to: Funding a house purchase

[56samba]

Assuming the divi tax has not been considered, if you are withdrawing a significant sum say 90k+ in one tax year, you will have to consider how losing the personal allowance also affects your tax bill.

[jmo21]

Typically I didn't illustrate it correctly

Yes, all dividend tax etc has been paid against it - this is literally all monies left over from previous financial years wherein all gross amounts have had their tax/vat/anything else accounted for and paid out.

That is a pretty big bit not to mention.

All dividend tax has been paid against?? really? without withdrawing it from the company?? YOU PERSONALLY paid any higher rate tax on the sum £X000 sitting in your company account?

I am assuming this is your first year?

As I say, this is all leftover money after all year end div tax, self assessment, corp tax, vat etc is paid, so am I missing anything I need to consider?

have you definitely PERSONALLY paid the dividend tax? the above makes it sound like you think div tax is something paid by your company. (and really there is such thing is div tax, it is personal income tax on income above the higher rate limit)

[TheCyclingProgrammer]

Yes (in my head anyways). I just came on here to check/double check/triple check vs accountant advice etc

You need to be absolutely sure here: are you talking about company reserves or are you talking about money owed to you because you've declared £xxx of dividends over the years but left the money in the company bank account, so its effectively credited to your director's loan account?

As Patrick said, if its simply a director's loan balance you can pay the back to yourself whenever you want.

If its reserve profits that haven't been declared as dividends then you need to declare a dividend and pay whatever taxes are due.

Perhaps a simpler way of putting it: do you have dividend vouchers covering all of the money you've got set aside in the business account and have already declared these dividends on the tax returns for the relevant years?

The reason people are asking is because its unusual to declare dividends over multiple years (potentially paying tax on them if above the higher rate threshold) and not withdraw the money into your own personal account where you can actually do something with it (even if its sticking it in a savings account, or paying the aforementioned tax).

[northernladuk]

lol - alls well that ends well. I suspect everyone was a little suspicious because they couldn't believe you hadn't done it already. Its not unique to you either.

It's not???

[piebaps]

lol - alls well that ends well. I suspect everyone was a little suspicious because they couldn't believe you hadn't done it already. Its not unique to you either.

[blueislander]

Why is it sitting in an account earning next to no interest? The mortgage company many question it if it suddenly appears from the company as well. Better to make it yours as soon as possible.

Basically because I have been 100% on top of what I need to pay out against my earnings, and 100% negligent on a smart way to actually make what's left work for me. I wish I could say it was more than that frankly but I've just not got round to it which is tres imbecile.

Accountant gave the thumbs up, moving it over now.

Cheers.

[northernladuk]

Why is it sitting in an account earning next to no interest? The mortgage company many question it if it suddenly appears from the company as well. Better to make it yours as soon as possible.

[vwdan]

Yes (in my head anyways). I just came on here to check/double check/triple check vs accountant advice etc

So this money has been declared dividends and you've included it on YOUR Self Assessment?

Why didn't you just transfer it before - most people are desperate to get money out of the business.

[blueislander]

Is it simply the case that you haven't transferred it from your company bank account to your personal account yet?

Yes (in my head anyways). I just came on here to check/double check/triple check vs accountant advice etc

[LondonManc]

Typically I didn't illustrate it correctly

Yes, all dividend tax etc has been paid against it - this is literally all monies left over from previous financial years wherein all gross amounts have had their tax/vat/anything else accounted for and paid out. So basically it is the question of "when I physically transfer to my current account am I forgetting anything or are there some unheard of fees I would have to pay for a transfer out from my business account". I don't think there is, and this is for my primary house.

For this coming year-end, I have a separate pot of income etc that will cover it all.

I am probably still not making sense...!

Is it simply the case that you haven't transferred it from your company bank account to your personal account yet?

[blueislander]

Typically I didn't illustrate it correctly

Yes, all dividend tax etc has been paid against it - this is literally all monies left over from previous financial years wherein all gross amounts have had their tax/vat/anything else accounted for and paid out. So basically it is the question of "when I physically transfer to my current account am I forgetting anything or are there some unheard of fees I would have to pay for a transfer out from my business account". I don't think there is, and this is for my primary house.

For this coming year-end, I have a separate pot of income etc that will cover it all.

I am probably still not making sense...!

[Patrick@Intouch]

If I read you correctly, this is the balance owed to you through your directors loan account and is the undrawn balance of dividends declared, salary processed and expenses claimed accumulated over a period.

This being the case then in terms of income tax there is nothing to be concerned with as this money is owed to you from income on which you have already paid tax.

Is this house going to be your primary property or are you buying a second property? If the latter then you should be aware of increased rates of stamp duty and reduced ability to claim mortgage interest against rental income property as an individual. If the former then all is good.

[LondonManc]

... awaiting accountants response so thought I would post in here for the consensus view...!

So I am looking to buy a house, and I have X amount of money for the deposit. The money sits in my business account, and is what I consider "separate" from the company money. What I mean by that is all tax due has been paid on this money that has accumulated over the last 3 years.

So, when it comes to plonking down the money, just a simple case of transfer to my current account and then fire over to the solicitors right? I am not missing any huge red lights here?

As I say, this is all leftover money after all year end div tax, self assessment, corp tax, vat etc is paid, so am I missing anything I need to consider?

Cheers all!

Say you've got 50k - have you already accounted for this through your year end accounts, have you declared a dividend to draw it against?

If it's carried over profit, i.e. warchest, you've not paid any tax on it yet because you haven't removed it from the company. Or are you saying you've declared the dividend, paid the tax on it and simply haven't transferred the money yet?

[northernladuk]

And how you are you accounting for this money? Divi it out? Directors loan? Obviously a whole host of gotcha's with Directors Loans. There is also the fact that many BS won't accept loans as a deposit.

[eek]

... awaiting accountants response so thought I would post in here for the consensus view...!

So I am looking to buy a house, and I have X amount of money for the deposit. The money sits in my business account, and is what I consider "separate" from the company money. What I mean by that is all tax due has been paid on this money that has accumulated over the last 3 years.

So, when it comes to plonking down the money, just a simple case of transfer to my current account and then fire over to the solicitors right? I am not missing any huge red lights here?

As I say, this is all leftover money after all year end div tax, self assessment, corp tax, vat etc is paid, so am I missing anything I need to consider?

Cheers all!

Yes dividend tax when you withdraw the money.....