Reply to: Director's Loan after Company year end

[Research and Development]

I know this is an old post but I had to join to reply.....

I think you need to take a break from the business and accountancy forums for a few days. But I do wish people would apply common sense

A director's loan can only be given to or from a director (the clue is in the NAME).

Why are there still times when I wish we had the ability to set text to flash annoyingly.

To Northern Lad and EEK for their response to someone who was asking a perfectly reasonable question (about as it happens a possibly permissible act if the secretary were a shareholder). Since it is actually a participator loan where a director in a close company is typically a subset, then sorry but you were wrong, it is not restricted to Directors. Perhaps you would like to read the section from the HMRC manual below referring to the tax implications. I by the way am a professional tax adviser and both I and the other participator in my company who is not a director make very good use of participator loans.

For the avoidance of doubt this is not intended to be a full account of the implications of loans to participators, just a reminder to take with a pinch of salt the "advice" or comments of those that make surly comments on the knowledge of others without evidence to back it up. Especially when they are actually wrong.

From the HMRC publication on loans to participators
Section 455 tax
Where a close company makes a loan or advances money to an individual who is either:

a participator in the company
an associate of a participator

then, unless the loan or advance was made in the ordinary course of the close company's business and that business includes the lending of money, or relief under S458 Corporation Tax Act 2010 is due the close company is due to pay tax under S455 Corporation Tax Act 2010. S455 applies only if the company is a close company at the time the loan or advance is made.
Where tax has been paid in earlier years under S419 Income and Corporation Taxes Act 1988 any relief due should be claimed under S419(4).

A participator is any person having a share or interest in the capital or income of the company. Commonly loans or advances are made to directors of close companies (who are also participators) through their loan accounts. Where an individual participator's or director's loan account is overdrawn this should be reviewed to consider whether the company is liable to pay S455 tax.

I hope that helps to clear up your confusion

[JamJarST]

My accountant advised me not to take a loan, even up to the £5K limit, as it is easy to go over the £5K and so be liable for extra tax etc.

Don't you mean he advised if you take a loan, not to take the loan right up to the £5k limit in case something pushes it over the limit.

[Waldorf]

My accountant advised me not to take a loan, even up to the £5K limit, as it is easy to go over the £5K and so be liable for extra tax etc.

[contractor55]

SueEllen- I do have an accountant and I do use him however as the same time I look to use this board to bounce idea`s around before I approach him so I have some background. As in all professions there is no one expert so investigating idea`s from other people is always good.

[SueEllen]

Incognito- thank you for reply and support

SueEllen- thank you for the link I shall look it up.

northernladuk-"and ask questions that are mildly offensive to people who have put the effort in to find this from proper sources you are going to get a bit of stick. " In what way is my question offensive- there was no direction to you or to anyone else

I noticed you didn't bother to ask answer my last question - Have you got an accountant?

You seem to be making up things as you go along and a good accountant will ensure that your affairs are set up to be tax efficient and most importantly legally.

[northernladuk]

Incognito- thank you for reply and support

SueEllen- thank you for the link I shall look it up.

northernladuk-"and ask questions that are mildly offensive to people who have put the effort in to find this from proper sources you are going to get a bit of stick. " In what way is my question offensive- there was no direction to you or to anyone else

As SueEllen says. Maybe it was the wrong word for which I humbly apologise on bended knee.

I think NLUK is horrified and shocked about someone who doesn't understand a basic concept which has very serious implications for the person running the limited company if done incorrectly.

[contractor55]

Incognito- thank you for reply and support

SueEllen- thank you for the link I shall look it up.

northernladuk-"and ask questions that are mildly offensive to people who have put the effort in to find this from proper sources you are going to get a bit of stick. " In what way is my question offensive- there was no direction to you or to anyone else

[SueEllen]

If his questions offend you then don't answer them, it's simple. He's asking a simple question he doesn't expect to have his head ripped off for asking it. That is how people learn and it doesn't help the board when you've got bunch of bolshy arseholes acting like they're doing the world a favour by being here.

I think NLUK is horrified and shocked about someone who doesn't understand a basic concept which has very serious implications for the person running the limited company if done incorrectly.

Contractor55 the government has set up a website for England and Wales called Business Link which aims to help businesses in running their affairs by giving support, advice and information.

It's very simple to use so if you put the word "director" into the search box one of the articles it immediately comes up with a link to is "What is not a directors loan for corporation tax purposes".

The website address is this - Business support, information and advice | Business Link

I also suggest you talk to your accountant and get your company structure sorted out with him/her for the best tax implications for you. You do have an accountant don't you?

[Incognito]

Not run your finances from an online forum of strangers who can advise on the exact questions you ask but are unable to comment on other aspects you have already implemented and don't know.

I am afraid if you come on here... and I would wager any other board.. and ask questions that are mildly offensive to people who have put the effort in to find this from proper sources you are going to get a bit of stick.
.

If his questions offend you then don't answer them, it's simple. He's asking a simple question he doesn't expect to have his head ripped off for asking it. That is how people learn and it doesn't help the board when you've got bunch of bolshy arseholes acting like they're doing the world a favour by being here.

I am sure you will be offended but I am actually giving you advice here which will stand you in much better stead in the next few years

Same to you, patience is a virtue.

[northernladuk]

I think you need to take a break from the business and accountancy forums for a few days. But I do wish people would apply common sense

A director's loan can only be given to or from a director (the clue is in the NAME).

Why are there still times when I wish we had the ability to set text to flash annoyingly.

Many thanks for your valuable advice. I shall take it on board. Odd you tell me take a break but still point out the OP's lack of common sense in the same post but.. ah well.

I thought this was a forum to share and help others who may not be a clever as some people think are they. For someone who has been a member since 09 and seems on average to post/ reply some 4 times a day including weekends perhaps needs, as someone else suggested, take a break. It is here to help people and not show how "clever" people think they are

It is indeed... but.... the posters have to show some level of common sense/effort in running their companys. You are a company director and you have to understand the responsibilities that come with that and the repercussions of not doing that. You have a legal obligation to run your finances correctly. This tends to cover understanding exactly what a director is and a non working shareholder is. It also means getting an accountant or getting yourself educated to level you can do it yourself. Not run your finances from an online forum of strangers who can advise on the exact questions you ask but are unable to comment on other aspects you have already implemented and don't know.

I am afraid if you come on here... and I would wager any other board.. and ask questions that are mildly offensive to people who have put the effort in to find this from proper sources you are going to get a bit of stick. Your reputation should help you spot this for a start. We are here to advise you on good business practice, not to rip off your company/HMRC whilst at the same time showing absolutely no evidence you understand your situation or have put any effort in to do so.

I am sure you will be offended but I am actually giving you advice here which will stand you in much better stead in the next few years than asking if you can loan money from your company to all insundry.

[contractor55]

thank you for all your replies.

I thought this was a forum to share and help others who may not be a clever as some people think are they. For someone who has been a member since 09 and seems on average to post/ reply some 4 times a day including weekends perhaps needs, as someone else suggested, take a break. It is here to help people and not show how "clever" people think they are

[eek]

Jesus

I think you need to take a break from the business and accountancy forums for a few days. But I do wish people would apply common sense

A director's loan can only be given to or from a director (the clue is in the NAME).

Why are there still times when I wish we had the ability to set text to flash annoyingly.

[northernladuk]

I know but I thought the work Director may be extended to shareholder in some circumstances. Does a Company Sec. count as a director with re to Loans?

Jesus

[JamJarST]

I know but I thought the work Director may be extended to shareholder in some circumstances. Does a Company Sec. count as a director with re to Loans?

No, a director is a director, and a company secretary is a company secretary. A director can be a company secretary, but being secretary does not make you a director.

[contractor55]

I know but I thought the work Director may be extended to shareholder in some circumstances. Does a Company Sec. count as a director with re to Loans?