Reply to: Directors loan end of year

[TheCyclingProgrammer]

Your DL will need to be repaid within 9 months of your year end date to avoid an s455 charge, although on £450 that isn't necessarily the end of the world (it's like a temporary CT charge which you get back the year after you repay it).

As others have said though, the simplest thing to do would be to declare a dividend (if you have any basic rate band left do it now, or wait until the new tax year) and credit it to the DLA.

[FK1]

Hi,

My year end was February and my accountant has finalised my accounts and informed me that the Directors Loan Account has a debit of £450, that must be repaid. This was a bit of a surprise.

What implications does this have to me and my company, if any? I.e. tax.

How do I pay the money back to my company?

Thank you.

Check why first. Do not trust your accountant. They may decide do not approve some of your expenses on their own belief while another accountant would not see a problem. I had that experience with SJD years ago. 5 years my Starbucks expenses were OK as used for lunches but a new accountant decided that is not and without asking me told me about I have ££600-800? as Director Loan that must be repaid. As he decided so.

Directors Loan itself over the End of Year is normal thing. Nothing to afraid. Repay it in the meantime with maybe 3% interest and that all.

[chopper]

Okay thank you. Essentially I'll be paying the 7.5% dividend fee this way, I thought there would be a different way around it.

Is the plan to keep the money in the company forever, or is the plan to eventually take the money out and spend it yourself?

There is no more tax efficient way of taking money out of YourCo than paying the 7.5% dividend tax. Leaving money in YourCo for taking out later simply means you'll almost certainly pay more tax on it. Tax rates for contractors are only heading in one direction at the moment.

So provided the cash is in your company, you should be taking dividends out right up to the top of the basic rate band.

And besides, if you're on £500 a day (so, what, £110,000 per year) then the £450 is less than one day's pay. The 7.5% dividend tax on it is £33.75. An actual drop in the ocean. Your client has probably paid you more than £33.75 whilst you sit on coffee breaks during one day. So either you pay YourCo £450, or you pay HMRC £33.75 and keep the balance.

Or even better, you pay that £450 into a SIPP. Winner winner, chicken dinner.

But, if you want the company's money to become your money, then you must pay the tax.

[TonyF]

Hi,

My year end was February and my accountant has finalised my accounts and informed me that the Directors Loan Account has a debit of £450, that must be repaid. This was a bit of a surprise.

What implications does this have to me and my company, if any? I.e. tax.

How do I pay the money back to my company?

Thank you.

Transfer the money or pay a cheque from your personal account to the company and then reconcile that in the accounts as repaying the DLA. There's nothing more that you need to do - how you get the money in the first place is up to you as well. You could declare a dividend, you could pay a bonus as salary, you could personally buy things and claim the valid business expense back from the company and not actually transfer the money over.

There are no implications for the company regarding tax, since this is you repaying the loan. The only implication for you personally comes when you get the money that you use to repay it - if you're declaring a dividend then you'll attract tax on that (presuming you are over the £5k tax free threshold). If you are paying a bonue then that might attract income tax and national insurance depending on what you've already paid this year.

[northernladuk]

We've already got one.

I'll line em up. You knock em down.

[northernladyuk]

What we need is some kind of tool to help us find all this useful information that there is out there.

We've already got one.

[northernladuk]

What we need is some kind of tool to help us find all this useful information that there is out there. Something we could type Directors Loan and it would return us lots of useful links to the relevant information.

Or a phone so he can call his bloody accountant.

[northernladyuk]

I'm sure I already said that....

Although the OP is now worried about paying tax on the nominal dividend. No helping some people...

Take a Director's Loan to cover the tax.

[SueEllen]

I'm sure I already said that....

Although the OP is now worried about paying tax on the nominal dividend. No helping some people...

You have just noticed...

[malvolio]

Hi Saturn,

I'm sure you're longing for some helpful advive.

Tell your accountant you wish to declare a paper dividend. Job done.

I'm sure I already said that....

Although the OP is now worried about paying tax on the nominal dividend. No helping some people...

[tarbera]

Check if the loan had ppi and make a claim

[Pip in a Poke]

Hi,

My year end was February and my accountant has finalised my accounts and informed me that the Directors Loan Account has a debit of £450, that must be repaid. This was a bit of a surprise.

What implications does this have to me and my company, if any? I.e. tax.

How do I pay the money back to my company?

Thank you.

Hi Saturn,

I'm sure you're longing for some helpful advive.

Tell your accountant you wish to declare a paper dividend. Job done.

[northernladyuk]

Okay thank you. Essentially I'll be paying the 7.5% dividend fee this way, I thought there would be a different way around it.

Drive 1000 miles.

Incidentally I never noticed the nuance of tax v NI. Is that new?

For tax purposes: 45 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile

For National Insurance purposes: 45 pence for all business miles

[CoderSaturn]

Declare a dividend but don't pay any money...?

Okay thank you. Essentially I'll be paying the 7.5% dividend fee this way, I thought there would be a different way around it.

[CoderSaturn]

Why didn't you ask your accountant when he advised you? That is kinda what he is there for.

EDIT : I see you still haven't learnt which part of the forum is which yet... but how did you renewal negotiations go?

Good thanks, they offered £500 a day in the end.