Reply to: Credit card bill & benefit in kind

[lfc69]

Cheers Sally & ThunderLizard

I will just take the hit, put it in the "another experience of life" box and start again in April

Thanks everyone, I think we can end this thread now

[thunderlizard]

Sally is right. A director's loan is the thing to do in this case. If you pay it back in the same accounting year I don't think it even has to show up in the accounts.

[SallyAnne]

Whats wrong with you lot? All the lad is asking is how can he take a further £3k out of his company account in the most tax efficient way.

If he takes it as divvies he'll go over the tax threshold.

Ifc69 - do you know you can take a director loan of up to £5k (I think). It obviously has to be paid back (again, *I think* it's within 6 months of your year end or something like that). That might get you out of paying interest on your card for a while?

I'm not much help with this stuff as I just take whatever I want out of my company account and take the tax hit. It wont be the best way of doing things, but I couldn't give a toss

[ASB]

Another option.

This might be effective, or it might not and you would need to speak with your accountant but the company can pretty much use it's funds to pay whatever the hell it wants (subject to board approval). The question is the tax treatment.

now, if this is a temporary thing one thing that you might consider is for the company to pay the 3k - that of itself is not a problem (apart from it being illegal*). This then becomes a loan to you which should be cleared within 9 months.

You clear the loan after april when you might be able to be a bit more organised with respect to 40% taxation.

The potential advantage to this route is you might be able to save some 40% tax.

In any event the loan is a benefit in kind to the director - so the nominal interest is taxable. This can be avoided by payng an approrpiate rate of interest to the company.

This might help, and your accountant reaction might vary from "ok fine", through "well I don't generally recommend this" to "you're having a laugh"

* The companies act effectively precludes a company making loans to it's director. However it needs a complaint from an injured party - e.g. other shareholders. Accountants views differ wildly on this practice.

It will also complicate the CT position because (if memory serves) the 3k is not allowable in the CT calculation - thus increasing the CT bill by 3k x 19%. However relief is obtained when he debt is repaid.

[scooterscot]

okay okay okay okay

I didn't come here for a fight, just advice.

As an ex-hippy let's chill

malvolio - thank you for taking the time to respond to this thread
expat - sorry if i didn't make the question clear
everyone else - thanks

lfc69 why so angry? The guys are only trying to help, divert the anger elsewhere not on others

PS pay the extra tax, I’m over myself, get over it, get organised.

[lfc69]

okay okay okay okay

I didn't come here for a fight, just advice.

As an ex-hippy let's chill

malvolio - thank you for taking the time to respond to this thread
expat - sorry if i didn't make the question clear
everyone else - thanks

[malvolio]

so why the feck didn't you say that first rather than trying to be a di*k with questions like "Why do you think your company can pay your personal debts?"

I did. Company money and your money are not the same thing, so why do you think you can use one to pay the other? It is no more stupid than asking Marks and Spencer to pay your credit card for you.

It's not me being the d*ck. Sorry...

[expat]

so why the feck didn't you say that first rather than trying to be a di*k with questions like "Why do you think your company can pay your personal debts?"

Because you didn't make it clear what you wanted to do. And you asked a question about divis and tax, when your real requirement was cutting credit card interest payments.

Haven't I worked from one of your specs, on some Contract From Hell sometime??

[lfc69]

If its business expenses, then you can pay it all directly from company funds. If it isn't, you can't, you first have to withdraw money from the company as income or dividend and hey, you get to pay tax on it like everyone else.

so why the feck didn't you say that first rather than trying to be a di*k with questions like "Why do you think your company can pay your personal debts?"

[malvolio]

It is not business expenses, it is personal debt I had to incur last year due to some "cash flow issues"

I don't need re-educating, that's what I pay my accountant to tell me - if I knew the answers then I wouldn't need him. Just unfortunate he is away at the moment so I thought I would ask you good guys, although I should have expected a cr*ppy response from you rather than something constructive even if it was "you cannot do it".

Well screw you sunshine. The original question I asked was totally relevant to giving a sensible answer. If its business expenses, then you can pay it all directly from company funds. If it isn't, you can't, you first have to withdraw money from the company as income or dividend and hey, you get to pay tax on it like everyone else.

However it appears you are failing to differentiate between YourCo money and your personal money and if you don't get over that you are going to be in trouble. Learn the rules, then complain.

Fscking amateurs...

[boredsenseless]

It is not business expenses, it is personal debt I had to incur last year due to some "cash flow issues"

I don't need re-educating, that's what I pay my accountant to tell me - if I knew the answers then I wouldn't need him. Just unfortunate he is away at the moment so I thought I would ask you good guys, although I should have expected a cr*ppy response from you rather than something constructive even if it was "you cannot do it".

You don't pay your accountant to answer questions like that, it is obviously a private individual question not a company one so the fee your company pays him wouldn't 'officially' cover this question

[lfc69]

Note we haven't had an answer to my original question yet...

If we did, it would rapidly become obnvious if the OP is paying expenses the hard way or is looking to offload personal debt. Either way, he clearly needs re-educating.

Why do you think your company can pay your personal debts?.

It is not business expenses, it is personal debt I had to incur last year due to some "cash flow issues"

I don't need re-educating, that's what I pay my accountant to tell me - if I knew the answers then I wouldn't need him. Just unfortunate he is away at the moment so I thought I would ask you good guys, although I should have expected a cr*ppy response from you rather than something constructive even if it was "you cannot do it".

[lfc69]

Why don't you just transfer the debt to an interest free credit card for now. Pay off the minimum until you are in a position to declare the next dividend?

Probably the easiest way forward, thanks _V_

[expat]

Note we haven't had an answer to my original question yet...

If we did, it would rapidly become obnvious if the OP is paying expenses the hard way or is looking to offload personal debt. Either way, he clearly needs re-educating.

Or Alan of Nixon Williams has put his finger on it: the OP needs more income, and the question is how not to pay more tax.

[malvolio]

Note we haven't had an answer to my original question yet...

If we did, it would rapidly become obnvious if the OP is paying expenses the hard way or is looking to offload personal debt. Either way, he clearly needs re-educating.