Reply to: Directors Loan

[Wanderer]

In terms of repaying the interest, my advice would be to settle any interest due at the end of each tax year, this way you can clearly demonstrate that the benefit has been made good and there will be no requirement to report the loan on your P11d.

As the 2012/13 tax year ended almost 5 months ago, I suggest you pay any interest owing at 5th April as soon as possible and settle any further interest at the end of the current tax year, or sooner if the loan is repaid before then.

Good advice! That way there is no question of it being a beneficial loan because the interest is right there in black and white in the current personal tax year.

[Project Monkey]

advice

Muphry's law?

LMFAO

[Martin at NixonWilliams]

Hi Experts,

I need your expert advise, I have taken a director's loan for my myself being the director in dec 12. My companies accounting period runs from Oct - Sep every year. My query is there is suppose to be a 4% interest which I need to pay my company back, apparatently when I took the loan I did not do due deligence and was just aware that I need to pay it completely back within 9 months of company accounting period ends to avoid any co-operation tax. I am running 09th month since I took the loan, just wondering what happens with the interest I missed to pay till now, will it be fine if I pay the interest for the entire year now? Please advise, the amount I took out as directors loan is 50K GBP.

Thanks in advance.

It is clear that you need an accountant to guide you - getting these things wrong can be very costly.

To give you an idea of where you currently stand, the interest you owe is approximately £1,500 (£50,000 x 4% x 9/12). Additional interest of £167 will be due for each further month the loan is outstanding.

In terms of repaying the interest, my advice would be to settle any interest due at the end of each tax year, this way you can clearly demonstrate that the benefit has been made good and there will be no requirement to report the loan on your P11d.

As the 2012/13 tax year ended almost 5 months ago, I suggest you pay any interest owing at 5th April as soon as possible and settle any further interest at the end of the current tax year, or sooner if the loan is repaid before then.

I hope this helps.

Martin

[bobspud]

Absolutely. Just role the interest up into the loan itself, which effectively increases the original loan. You'll then have to pay interest on the interest of course.....

But don't forget that its all funny money and HMRC gives alot of it back to you when you pay the loan off your books. I have been borrowing loans every so often over the last few years and yes there is a charge come year end if you dont pay interest but then as you remove the loan the following year you get a nice fat cheque back from HMRC even if its not as much as you have paid them it's still a resounding victory to get money out of them.

Never understood why so many people on here are anti use of business money to fulfil short term projects..

The main important point to remember is NEVER borrow HMRC's cash unless you absolutely know that you can have that money back in the pot before you need to give it to HMRC.

[Clare@InTouch]

You can probably just pay the interest when you repay the loan. It's crucial that you repay it before the deadline though.

Absolutely. Just role the interest up into the loan itself, which effectively increases the original loan. You'll then have to pay interest on the interest of course.....

[Wanderer]

just wondering what happens with the interest I missed to pay till now, will it be fine if I pay the interest for the entire year now?

You can probably just pay the interest when you repay the loan. It's crucial that you repay it before the deadline though.

Please advise, the amount I took out as directors loan is 50K GBP.

OK, now listen up. If you have 50k in the company that you can borrow then you aren't short of a few quid, are you. If you have that much money kicking around then you will get a huge benefit from some decent, detailed accounting advice but we can't do that for you. Go and get yourself an accountant right now and get them to review all your financial affairs to see where you are at.

[northernladuk]

FWIW, I've lived most of my life in Yorkshire...

Well once in awhile we get a bad apple that is far too clever and have to evict them

[TheFaQQer]

LOL great picture that. I just want to be as clever as TheFaQQer but coming from Yorkshire and correcting English don't really go hand in hand..... I can only learn from my mistakes which would make one think I have learned a lot.. but it seems not.

FWIW, I've lived most of my life in Yorkshire...

[northernladuk]

Haha, that's the second grammar nazism fail I've read of yours today!

LOL great picture that. I just want to be as clever as TheFaQQer but coming from Yorkshire and correcting English don't really go hand in hand..... I can only learn from my mistakes which would make one think I have learned a lot.. but it seems not.

[GillsMan]

I am so made of fail it hurts!

Haha, that's the second grammar nazism fail I've read of yours today!

[northernladuk]

advice

Muphry's law?

I am so made of fail it hurts!

[TheFaQQer]

Also you would be much better getting some professional advise...

advice

Muphry's law?

[northernladuk]

HM Revenue & Customs: Directors' loan accounts and Corporation Tax explained

[northernladuk]

Hi Experts,

I need your expert advise, I have taken a director's loan for my myself being the director in dec 12. My companies accounting period runs from Oct - Sep every year. My query is there is suppose to be a 4% interest which I need to pay my company back, apparatently when I took the loan I did not do due deligence and was just aware that I need to pay it completely back within 9 months of company accounting period ends to avoid any co-operation tax. I am running 09th month since I took the loan, just wondering what happens with the interest I missed to pay till now, will it be fine if I pay the interest for the entire year now? Please advise, the amount I took out as directors loan is 50K GBP.

Thanks in advance.

Firstly it is advice you are looking for and not advise...

Secondly you admit you did a pretty poor job of reseraching this first and it appears you are continuing to do a pretty poor job of it. You are so deep in the doo doo with this one you really need to do things a bit better. There are plenty of threads about this if you try the search method as described below...
http://forums.contractoruk.com/welco...uk-forums.html

Also you would be much better getting some professional advise and not asking on a free forum of contractors where a couple of accountants give their time for free but don't really care at the end of the day.

Google would also be a better bet for you than just asking here as well.

If you are going to start pulling sums like that out of your company without researching you are going to have to be prepared for some real problems. The fact you think you think it is called 'co-operation tax' is just shameful.

Remember as a director you are legally responsible for your company's finances. I would say from reading this your are failing that responsibly miserably. I can only think with this level of knowledge you are just a troll.

[Sockpuppet]

You have been paying interest since you took the loan out though. That's what your company accounts show isn't it. I mean a transaction every month for 0.33% of the loan.

If you have no idea at the massive hint I'm dropping, you really need an accountant.