First payment coming through as a Ltd - can I raid it?

[Gonzo]

and I thought I was being pedantic.
You MAY run into BIK issues, not WILL
But then it depends on your definition of 'issues'. I'd say the majority would infer it to mean something negative and inevitable rather than possible solutions to avoid the bad stuff.
argh.....got better things to do...need breakfast

Of all the posts that I forget to add IANAA to it had to be this one.

It does depend on your definition of "issues" of course. For me, paying tax that could easily be avoided is most definitely an issue.

Hopefully the OP will be aware of the implications of overdrawing the DLA more than £5,000 now and that was the message that I wanted to get across.

[London75]

Surely this is overkill, you're the Director, have a meeting with yourself and agree with yourself how much in dividends you want to pay yourself (very safe to go with up to 50% as someone else mentioned).

Write out a form saying the above and withdraw the money.

Send copy to accountant and say "I did that" so they can file it.

[Olly]

Not WRONG.

If you pay borrow more than £5'000 you will run into BIK issues. These being "if you don't pay sufficient interest on the loan, then you will have to pay income tax and NI on the interest your not paying".

To the OP. "Wages".

and I thought I was being pedantic.
You MAY run into BIK issues, not WILL
But then it depends on your definition of 'issues'. I'd say the majority would infer it to mean something negative and inevitable rather than possible solutions to avoid the bad stuff.
argh.....got better things to do...need breakfast

[NotAllThere]

Originally Posted by Gonzo
1. Never overdraw the DLA by more than £5,000 otherwise you will run into Benefit in Kind issues.

WRONG - you may run into BIK issues if you don't pay interest to your Ltd on the excess

Not WRONG.

If you pay borrow more than £5'000 you will run into BIK issues. These being "if you don't pay sufficient interest on the loan, then you will have to pay income tax and NI on the interest your not paying".

To the OP. "Wages".

[Olly]

1. Never overdraw the DLA by more than £5,000 otherwise you will run into Benefit in Kind issues.

WRONG - you may run into BIK issues if you don't pay interest to your Ltd on the excess

2. Make sure that the loan is paid back by the company year end otherwise there is a 25% tax charge

WRONG - I believe it's another 9 months on top of year end (and you can get the money back)

Internet advice - you get what you pay for

[Gonzo]

I should add, make sure that you have a personal warchest in future.

If your finances are this tight with a 9 week payment gap how are you going to survive 3 months or 6 months or 9 months or 12 months on the bench?

[Gonzo]

Thanks for the info all, yes will run it by the Accountants too but wanted to see what the answer was in the real world too. Will defo pay it back, no worries with that, just want to pay the CC off at the earliest opportunity.

What the others said.

Assuming that you are a director and shareholder of the company then pay yourself the money and debit the Directors' Loan Account (DLA).

There are a couple of points to be aware of:

1. Never overdraw the DLA by more than £5,000 otherwise you will run into Benefit in Kind issues. Be aware that some accountants will debit the DLA with rounding differences or expenses that you claim that are not allowable so taking out an exact £5,000 is probably not a good idea.

2. Make sure that the loan is paid back by the company year end otherwise there is a 25% tax charge on the company until the loan is settled and you don't want that.

The DLA really exists to allow the Directors to loan money to the company if there are cash flow issues but subject to the constraints mentioned above there aren't any issues with it going overdrawn.

In theory the shareholders could kick up a stink with the directors about it but if that is you in both cases it is not likely to be an issue is it?


I have heard some accountants advise against it but only because of the risk that you will forget to repay by the year end.

[wiggabaiters]

Thanks for the info all, yes will run it by the Accountants too but wanted to see what the answer was in the real world too. Will defo pay it back, no worries with that, just want to pay the CC off at the earliest opportunity.

[Spacecadet]

But pay it back!! we have so many posts on here with people not being able to pay what is due at the end of the year to sloppy/greedy accounting!!

Or just down to a complete lack of accounting and company management.

If you are not caught by IR35 you could probably take 50% out as divs without worrying about it.

[northernladuk]

But pay it back!! we have so many posts on here with people not being able to pay what is due at the end of the year to sloppy/greedy accounting!!

[Sally BFCA]

You can withdraw a sum from the company. When the accounting entry is made, it can be split between expenses owed, salary owed and the remainder as a dividend payment as long as there is sufficient profit in the company to pay a dividend.

[VectraMan]

WHS, but ask your accountant. They don't need to do sums to give you some basic advice. If they don't respond quickly, get a better accountant.

But maybe your problem is having 9 wives.

[rsingh]

Pay yourself up to £5000 and put it down as a director's loan. You can repay that when it comes to doing your dividend or when you are in a better position.

HTH

[wiggabaiters]

Just gone from Umbrella to Ltd, long story but a 9 week delay in payments (thankyou Hays) so coffers are dry, living in Overdraft and Credit Card. Anyway 9 weeks wages will be going in soon and rather than wait for mine and the other directors salary to come out, sort the expenses etc can I just take a (largeish) chunk of the money out now to pay the bills and have cash for Xmas (which has been on hold) and then sort it out in the New Year as a dividend retrospectively. I'l be able to cover it in the future, just need some money asap to cover some bills & an important purchase 9wife xmas pressie!).

Bear with me on this one, Im very green to this accountancy malarky, and am wary of the accountants delaying me getting my hands on the gelt whilst they do their sums, which after all is mine. Or my Ltd companies at least...