Ltd Company - Personal/Business account expenses

[Andy2022]

Use the Avios for business flights and there's no minefield to be had. It's actually more awkward to take the cash off your balance.

But it's a very good point - I keep hearing ads on the radio for the Amex Business Card and their strap line is: "the card is for business, the points are for pleasure" making it very clear that the points earned can be used for personal, rather than business, expenses. My understanding is that this behaviour would create a BIK that needed reporting.

I seem to recall reading years ago somewhere (might have been here, might have been on AccountingWeb, might have been on the HMRC site) that as long as the benefit was "minimal" then there is no BIK but there's line there somewhere that is a bit subjective.

I think Capital on Tap is a bit more convoluted than Amex MR points.

AFAIK MR points accrue at a card holder rather than corporate level, whereas the Capital on Tap ones are at the company level

On the paid for card, Capital on Tap points can be used for cashback, gift cards or swapped to Avios and there was a discussion about the tax implications of this on Head for Points a while back — it was along the lines of “as the points have value for the company can you really use them tax free to give an employee a benefit”

[northernladuk]

Use the Avios for business flights and there's no minefield to be had. It's actually more awkward to take the cash off your balance.

But it's a very good point - I keep hearing ads on the radio for the Amex Business Card and their strap line is: "the card is for business, the points are for pleasure" making it very clear that the points earned can be used for personal, rather than business, expenses. My understanding is that this behaviour would create a BIK that needed reporting.

I seem to recall reading years ago somewhere (might have been here, might have been on AccountingWeb, might have been on the HMRC site) that as long as the benefit was "minimal" then there is no BIK but there's line there somewhere that is a bit subjective.

I asked this question ages ago and the overwhelming response was that if the points are used by and for the director no one cared.

[ladymuck]

I've got a business credit card comes with 1% cash back and syncs with FreeAgent which makes life easier

In theory I could have paid £99 for the version of Capital on Tap that allows Avios earning but I think it's a bit of a tax minefield so didn't bother asking the accountant about it and saved the £99

Use the Avios for business flights and there's no minefield to be had. It's actually more awkward to take the cash off your balance.

But it's a very good point - I keep hearing ads on the radio for the Amex Business Card and their strap line is: "the card is for business, the points are for pleasure" making it very clear that the points earned can be used for personal, rather than business, expenses. My understanding is that this behaviour would create a BIK that needed reporting.

I seem to recall reading years ago somewhere (might have been here, might have been on AccountingWeb, might have been on the HMRC site) that as long as the benefit was "minimal" then there is no BIK but there's line there somewhere that is a bit subjective.

[Andy2022]

What she said seems correct to me. If I was to do it directly from the company account this would mean a debit card, so no consumer credit protection, also it means potentially using a card with thousands sat in the account its linked to. Or maybe you have a business credit card?

The only difference via Freeagent means you have to create the expense rather than assign a type to a transaction on the company bank account.

Monthly, when I do the payroll, I do a second payment giving me my expenses back.

As to corporation tax, both methods are exactly the same. You only pay corp tax on profits.

I've got a business credit card comes with 1% cash back and syncs with FreeAgent which makes life easier

In theory I could have paid £99 for the version of Capital on Tap that allows Avios earning but I think it's a bit of a tax minefield so didn't bother asking the accountant about it and saved the £99

[northernladuk]

re: the bit in bold. At least do a bit of reading and understand some of the concepts before asking questions based on something your accountant might have said. Maximizing allowable expenses does reduce corporation tax owed at the end of the year, but has nothing to do with how you pay for those expenses (either directly from the business bank card v personal bank card and claiming expenses back from business)

A good point.. and as we tell all newbies.. Just because the company pays for it, it doesn't mean it's free. Still comes out of your pocket, albeit with a discount but still. Don't think it's a golden goose to deck your gaff out with all the tech imaginable.

Very important to think of the company money as not yours until you divi/expense it out which then because yours. Keep them distinct and many of the basic questions people ask will clear themselves up. If you consider company money as your money you'll trip over a lot of the rules of what you can and can't do.

[jmo21]

Hi all,

Sorry if this has been asked before, but I’ve just opened my Ltd company and my accountant has advised me to pay for all my business expenses on my personal account and then claiming it back from my business. I think she mentioned something in regards to corporation tax, but I’m not sure how this works.

If anyone can explain it in dummies/laments terms please?

Does anybody else do this? It seems quite counter-productive!

Thanks!

It's no different to if you were a permie, claiming expenses from your employer.

While it is an extra step, and a bit of extra work to track, like the permie, you as an employee of your new Ltd co can benefit for cash back from a personal card being used.

re: the bit in bold. At least do a bit of reading and understand some of the concepts before asking questions based on something your accountant might have said. Maximizing allowable expenses does reduce corporation tax owed at the end of the year, but has nothing to do with how you pay for those expenses (either directly from the business bank card v personal bank card and claiming expenses back from business)

[escapeUK]

Thank you for your reply! It is using FreeAgent and I have put a directors loan into my bank account.

I will go back and ask more questions, but she advised me to purchase everything on my personal account and claim it back from my business raising claims.

It seems counterproductive, but I’ll see what she says. Thanks!

What she said seems correct to me. If I was to do it directly from the company account this would mean a debit card, so no consumer credit protection, also it means potentially using a card with thousands sat in the account its linked to. Or maybe you have a business credit card?

The only difference via Freeagent means you have to create the expense rather than assign a type to a transaction on the company bank account.

Monthly, when I do the payroll, I do a second payment giving me my expenses back.

As to corporation tax, both methods are exactly the same. You only pay corp tax on profits.

[northernladuk]

Thank you for your reply! It is using FreeAgent and I have put a directors loan into my bank account.

I will go back and ask more questions, but she advised me to purchase everything on my personal account and claim it back from my business raising claims.

It seems counterproductive, but I’ll see what she says. Thanks!

You can use a points based personal card for the benefits and claim it back. Takes time but if you are a points chaser it can be worth it.

[llewdiskram]

If you have money in the company, it makes more sense just to pay the bills directly from that. I'd encourage you to go back and ask your accountant more questions. There might be some subtleties that you've missed, e.g. paying for an accountant from the business account vs buying your train ticket from a personal account.

If you've just opened the company and don't have any money in there yet, there's a question of how the company can pay for stuff. One option is to do a director loan, i.e. transfer a lump of money from your personal account to the business account then pay for stuff from the business account. Another option is to pay for stuff from your personal account and then claim it back from the company later.

Which accounting software are you using? E.g. FreeAgent makes a distinction between "director loan" and "out of pocket expenses" whereas Crunch merges them together as "money that the company owes to the director".

Thank you for your reply! It is using FreeAgent and I have put a directors loan into my bank account.

I will go back and ask more questions, but she advised me to purchase everything on my personal account and claim it back from my business raising claims.

It seems counterproductive, but I’ll see what she says. Thanks!

[hobnob]

If you have money in the company, it makes more sense just to pay the bills directly from that. I'd encourage you to go back and ask your accountant more questions. There might be some subtleties that you've missed, e.g. paying for an accountant from the business account vs buying your train ticket from a personal account.

If you've just opened the company and don't have any money in there yet, there's a question of how the company can pay for stuff. One option is to do a director loan, i.e. transfer a lump of money from your personal account to the business account then pay for stuff from the business account. Another option is to pay for stuff from your personal account and then claim it back from the company later.

Which accounting software are you using? E.g. FreeAgent makes a distinction between "director loan" and "out of pocket expenses" whereas Crunch merges them together as "money that the company owes to the director".

[llewdiskram]

Hi all,

Sorry if this has been asked before, but I’ve just opened my Ltd company and my accountant has advised me to pay for all my business expenses on my personal account and then claiming it back from my business. I think she mentioned something in regards to corporation tax, but I’m not sure how this works.

If anyone can explain it in dummies/laments terms please?

Does anybody else do this? It seems quite counter-productive!

Thanks!