Reply to: Borrowing from own LTD company.

[Scrag Meister]

WWS ^

Personally I try not too but occasionally I don't see a problem with it.

Back in Jan I bought a new car which I borrowed 16k from the company, come April 6th still pre-year-end, I took a large div and paid it back with 4% interest, as far as I am aware this is acceptable (legal) and tax efficient.

[Wanderer]

Bearing in mind I know I have to pay some interest on a loan. Can I take the £33k out for a 6 week short-term directors loan or is there an insolvency issue here???.

There is a lot of advice out there saying not to take directors loans, the money in the company isn't yours etc, but my view is that if you own the company then it's not illegal to take a loan from the company so you can do what you like with the company's money.

There is thread with a summary of how to do directors loans. Basically, pay it back with interest at the approved rate and understand the significance of the loan being outstanding at the company year end date and at the year end + 9 months.

[scooby]

Why dont you just pay a large divi, and this ensure that there is enough to pay your tax at year end?

(NB I'm probably speaking out of my arse!)

[northernladuk]

Not sure you should be paying that out of the company account matey.

Yeah you bloody noob!! It's COMPANY money, not YOUR money.. Read the flippin guides...

Jesus...

(just to keep Notascooby happy)

[Pondlife]

Have not discussed with my accountant yet, but was wondering what the rules are on taking a loan from your LTD for a short period of time.

Lets say for example you have £40k in your bank account.

£20k is put aside for corporation tax for 2011/2012 that needs to be paid in Sept 2012.
£5k put aside for VAT to be paid in a few months.
£8k put aside for Self Assessment tax

Bearing in mind I know I have to pay some interest on a loan. Can I take the £33k out for a 6 week short-term directors loan or is there an insolvency issue here???

I should add, I'm happy to take loans against the LTD for money I know will be paid out in divvies, this is about going into HMRCs money.

Not sure you should be paying that out of the company account matey.

[MarillionFan]

Where was the abuse about not using google - this has been asked lots of times already, are you sure you know what you're doing, don't mix company money and personal money and of course - are you cut out for contracting?

Paaah it's double standards in here sometimes.

We don't abuse our own in here. Only in General.

Also that advice is for noobs.

[northernladuk]

Hopefully a property in here. If the price is right.

http://www.strakers.co.uk/pdf/Strake...1232010177.pdf

There is a nice mansion in Bristol coming up soon, needs a bit of TLC, 35 not so careful 'owners' just vacated

Some great looking properties there. Some of them no brainers but some need some vision it seems.

[Notascooby]

Where was the abuse about not using google - this has been asked lots of times already, are you sure you know what you're doing, don't mix company money and personal money and of course - are you cut out for contracting?

Paaah it's double standards in here sometimes.

[MarillionFan]

Ohh what you getting???

Hopefully a property in here. If the price is right.

http://www.strakers.co.uk/pdf/Strake...1232010177.pdf

[Clare@InTouch]

I used to like you

[northernladuk]

(Oh and the reason. I'm off to a property auction) :-)

Ohh what you getting???

[northernladuk]

That's brilliant, sounds just like something Craig would say......

[Clare@InTouch]

Found it...

That's brilliant, sounds just like something I'd say......

[MarillionFan]

Any money you take that is not wages, expenses or dividends is a loan, and there are 2 separate issues:

Any loan over £5,000 will be a benefit in kind, and you’ll pay tax on the deemed value of any interest you’ve saved by not going to a bank. Keep in mind this is the total value of money you owe the company, so if you take a loan of £5,000 and then overpay your wages by £2 then the loan is £5,002 and becomes taxable. You can avoid the BIK by paying interest at 4%.

Any loans outstanding at the balance sheet date (company yearend) have to be disclosed in the accounts and on the company tax return. If they are not repaid within 9 months of the year end then the company will pay extra Corporation Tax of 25% of the loan value. This extra 25% is repaid to the company by HMRC when you repay the loan to the company. You should avoid repaying a loan and then taking it out again soon after as it’s an obvious avoidance tactic HMRC call bed & breakfasting. They will see through it and tax it as if it had never been repaid.

So to clarify, you can withdraw any amount in your LTD account regardless of it's final destination, on the priviso of a loan as long as it's declared & you pay it back within 9 months of year end. That's what I thought, just wasn't 100% certain if I could without any fear of wrongdoing pull out every last penny for a short period of time bearing in mind I know the money is earmarked for Hector.

(Oh and the reason. I'm off to a property auction) :-)

[northernladuk]

Found it...

Any money you take that is not wages, expenses or dividends is a loan, and there are 2 separate issues:

Any loan over £5,000 will be a benefit in kind, and you’ll pay tax on the deemed value of any interest you’ve saved by not going to a bank. Keep in mind this is the total value of money you owe the company, so if you take a loan of £5,000 and then overpay your wages by £2 then the loan is £5,002 and becomes taxable. You can avoid the BIK by paying interest at 4%.

Any loans outstanding at the balance sheet date (company yearend) have to be disclosed in the accounts and on the company tax return. If they are not repaid within 9 months of the year end then the company will pay extra Corporation Tax of 25% of the loan value. This extra 25% is repaid to the company by HMRC when you repay the loan to the company. You should avoid repaying a loan and then taking it out again soon after as it’s an obvious avoidance tactic HMRC call bed & breakfasting. They will see through it and tax it as if it had never been repaid.