Reply to: 2 day loan from Ltd

[ladymuck]

HMRC are the enemy now

No more friendly fire


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In what universe would they even care

Bad bad advise


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Ok...

[WordIsBond]

Good advice but zzzzzzzzzz

It’s for 2 days, do it buy car


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And then if HMRC ever starts poking around and sees this nice big payment to you and says, "It's salary," you don't have the paperwork to prove it wasn't.

Record it clearly, send your accountant an email with the record at the time and a notification when it is repaid. Take the five minutes to cover your back side. HMRC are not always nice people.

[GhostofTarbera]

My tin foil hat says HMRC may want to see evidence of repayment and while they've got the hood open let's have a little look about...

In what universe would they even care

Bad bad advise


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[GhostofTarbera]

My tin foil hat says HMRC may want to see evidence of repayment and while they've got the hood open let's have a little look about...

HMRC are the enemy now

No more friendly fire


Sent from my iPhone using Contractor UK Forum

[ladymuck]

Ah fair enough

My tin foil hat says HMRC may want to see evidence of repayment and while they've got the hood open let's have a little look about...

[SimonMac]

That's not what I said.

Yes it does have to be repaid by then but if you don't have anything outstanding at year end, it's one less excuse for HMRC to want to have a poke about

Ah fair enough

[ladymuck]

I thought the loan has to be repaid 9 months after the end of the financial year? Why is it heat to have it cleared at the end of the financial year?

That's not what I said.

Yes it does have to be repaid by then but if you don't have anything outstanding at year end, it's one less excuse for HMRC to want to have a poke about

[SimonMac]

No major implications if it’s repaid in 2 days and the existing loan is repaid before the 9 month deadline following the end of your financial year.

If you can avoid there being any loan outstanding at year end, that's best

I thought the loan has to be repaid 9 months after the end of the financial year? Why is it heat to have it cleared at the end of the financial year?

[GhostofTarbera]

For loans over £10K, you have to pay interest to YourCo at the official rate, or more. The official rate is 2.5%.

The amount of interest you pay is 2.5% * loan balance * whole months the loan is outstanding / 12. Beneficial loan arrangements (480: Chapter 17) - GOV.UK.

The number of whole months the loan will be outstanding is zero.

So, you have to pay interest, but the interest due will be zero.

Confirm with your accountant, of course. But I can't see any reason you can't do this.

I'd definitely recommend clear paperwork with a minute of a board meeting confirming the loan, the term and amount. I'd make it terminate the 5th, personally, just in case your money is delayed, but so as to terminate it in the same tax month in which it was issued. I don't think it matters if it is outstanding for less than 30 days, but I wouldn't want to give HMRC any wiggle room for claiming it was a month since it crossed tax months. That's probably an excess of caution, however, but it's what I'd do.

Good advice but zzzzzzzzzz

It’s for 2 days, do it buy car


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[WordIsBond]

For loans over £10K, you have to pay interest to YourCo at the official rate, or more. The official rate is 2.5%.

The amount of interest you pay is 2.5% * loan balance * whole months the loan is outstanding / 12. Beneficial loan arrangements (480: Chapter 17) - GOV.UK.

The number of whole months the loan will be outstanding is zero.

So, you have to pay interest, but the interest due will be zero.

Confirm with your accountant, of course. But I can't see any reason you can't do this.

I'd definitely recommend clear paperwork with a minute of a board meeting confirming the loan, the term and amount. I'd make it terminate the 5th, personally, just in case your money is delayed, but so as to terminate it in the same tax month in which it was issued. I don't think it matters if it is outstanding for less than 30 days, but I wouldn't want to give HMRC any wiggle room for claiming it was a month since it crossed tax months. That's probably an excess of caution, however, but it's what I'd do.

[Lance]

I would have thought you could delay payment by 2 days with the car dealer.

Credit card would make sense.

[wattaj]

Don't buy the car.

Check out leasing options for electric cars and read up on the BIK from April onwards.

Is this REALLY such good advice given the current climate and the likelihood of contractor limited companies dying out?

[ChimpMaster]

Don't buy the car.

Check out leasing options for electric cars and read up on the BIK from April onwards.

[BlasterBates]

I would have thought you could delay payment by 2 days with the car dealer.

[wattaj]

Loans from one's company are allowed. But, there are rules. Keep Directors Loans below 10k. Create paperwork and charge interest (currently 2.5% pa) on Beneficial Loans. Any Beneficial Loan still outstanding 9 months after the year end in which the loan was received will incur a repayable S455 charge on the company to HMRC.

Go for it. Google is you friend.