Directors Loan??

[Nixon Williams]

so if my account year end is 31/12/08, and at that point I have "lent" myself £3,000 - providing that by 30/09/09 the money is back thats ok?

Yes, but just check that you never exceed the £5K limit, this can be easily done if you forget or take an advance etc.

BTW - if you are in your first year, the repayment date may be slightly earlier, but your accountant will be able to advise on this.

Alan

[Bluebird]

so if my account year end is 31/12/08, and at that point I have "lent" myself £3,000 - providing that by 30/09/09 the money is back thats ok?

[Nixon Williams]

Remember that is the loan ever exceeds £5000 at any point during the year, even if for just one day, the £5000 exempt limit is removed and the whole loan is subject to tax on the beneficial loan.

So if you do take a loan, remember to take it into account if you ever take another loan or take a payment on account as this could tip you over the £5K limit.

Alan

[DaveB]

what if you want the loan to go past the year end accounts?
surely it just shows as a debit in the P&L?

The point of the loans is that if they are not paid before the years accounts are due - 9 months after the co. financial year end - then it becomes taxable income and you get hit for an extra 25% tax on the amount involved on your next tax assesment.

If you need the money long term declare a dividend instead, assuming you have the money available ion the Co.

[Bluebird]

what if you want the loan to go past the year end accounts?
surely it just shows as a debit in the P&L?

[NotAllThere]

I used to do on the first month of the quarter a £5000 loan to me, 2nd month£5000 loan to wife, third month £15000 (or so) divvy, (rinse and repeat) precisely to reduce paperwork.

[AlanR]

So no special paperwork as with Dividends then, ok.

Many thanks for the help, much appreciated.

Alan

[malvolio]

And, of course, you pay it back as part of a dividend payment - so for example declare a divi of £10k but only pay yourself £6800. As long as it all balances at year end and is fully auditable in the books, keep it simple.

(BTW - it's a Debit in the loan account in your GL)

[Sockpuppet]

Just make a note in your co accounts.

today loaned myself £5k as directors loan.

Then whey you pay it back record - loan recieved.

Easy.

[NotAllThere]

I just put a record in the books that there's a £3200 (debit? credit? can never remember which way round it goes) on the director's loan account. Then when I pay it back, I put the opposite in.

No need for certificates or agreements - just make sure the transactions are recorded.

[AlanR]

Hi,

Apologies if i am raking over old ground but i did a search which came up with 20 pages of results and although i read those which i thought might be relevant, i couldnt find anything to answer my questions so i am hoping someone here can help me please.

I need to get my hands on a relatively small amount - ~£3200 - which will be paid back in full in about 6 - 8 weeks.

Now i could take the money from my savings account which would lose me interest, not a great deal i know but if i can avoid then why not. Or i could use my overdraft but that would obviously cost me even more.

So i am thinking about a Directors Loan. It is within the £5k limit that many threads suggest is the legal (?) limit and will be paid back well before my Tax Year end, there are sufficient funds within the Company account to cover this short term loan so i dont think there are any problems there.

My queries are to do with how it is recorded. Do i need to produce any kind of certification / agreement to detail the loan, amount etc and when it has been repaid?

Is there anything else that i need to record / take account of?

I know i could also award the shareholders a dividend - which i have not discounted - but i am 'planning for the future' and dont want to take out more money than is required, well not at this moment.

Anyway, all help / information welcome.

Regards

Alan