Can Director Business Loan be added yearly?

Discussion in 'Accounts & Finance' started by bambinou, Dec 3, 2015.

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  1. bambinou

    bambinou UKBF Regular Free Member

    129 0
    Hello,

    I am running a small company from home and have loaned a certain amount of cash to the company the last 3 years. This month I am going to get my first salary out of the company and would like to know if I am allowed to do this:

    Instead of taking £1500 each month.

    I would like to take £1000 + £500 back from Director, therefore declare only £1000.

    Would this be fine?

    It is my understanding that a director loan cannot be declared as an income at the end of the year.

    Thank you for your help,

    Ben
     
    Posted: Dec 3, 2015 By: bambinou Member since: Mar 22, 2008
    #1
  2. john1989

    john1989 Guest

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    If you have had no other income, you’ve potentially wasted your personal allowance.


    Yes you can pay yourself a salary, which is taxable income and draw down from your DLA credit balance with no tax consequences.


    For clarity, I would make two transfers from you bank account and clearly mark them as ‘salary’ and ‘DLA’.
     
    Posted: Dec 3, 2015 By: john1989 Member since: Jan 1, 1970
    #2
  3. TimCaprica

    TimCaprica UKBF Regular Free Member

    156 32
    Hello,

    You are right in that you can do this a loan repayment will not have any tax consequences.

    What I would do is make sure you pay the £1,000 and £500 in seperate payments that way it is really clear the £1,000 is salary and the £500 is a loan repayment.

    Even better though I would suggest you limit your salary to £883.33 per month. You can see why here:-

    http://learn.capricaonline.co.uk/op...mall-business-owner-managers-and-contractors/
     
    Posted: Dec 3, 2015 By: TimCaprica Member since: Aug 30, 2011
    #3
  4. john1989

    john1989 Guest

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    I would suggest that £883.33 per month could be the least tax efficient amount at this moment in time.
     
    Posted: Dec 3, 2015 By: john1989 Member since: Jan 1, 1970
    #4
  5. TimCaprica

    TimCaprica UKBF Regular Free Member

    156 32
    Why's that? I didn't mention catchup for the months not paid this tax year but are you thinking of something else?
     
    Posted: Dec 3, 2015 By: TimCaprica Member since: Aug 30, 2011
    #5
  6. john1989

    john1989 Guest

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    If it's the OP's only source of income, paying £883.33 per month would be wasting some of the personal allowance.

    If the OP has had other income in the year, part of the personal allowance would already be utilised, so the more efficient amount may be much less that £883.33 per month.
     
    Posted: Dec 3, 2015 By: john1989 Member since: Jan 1, 1970
    #6
  7. TimCaprica

    TimCaprica UKBF Regular Free Member

    156 32
    I see. Plenty of IFs there. I think the link I sent covers that.
     
    Posted: Dec 3, 2015 By: TimCaprica Member since: Aug 30, 2011
    #7
  8. bambinou

    bambinou UKBF Regular Free Member

    129 0
    Hello,

    Thank to all your replies, I really appreciate. When you speak about allowances you mean director allowances I presume, any more info on this please as I am not sure how allowances are calculated.
    Can I use my private car, get part of the petrol, internet, computer repairs cost partly covered with allowances?

    Thank you,

    Ben
     
    Posted: Dec 3, 2015 By: bambinou Member since: Mar 22, 2008
    #8
  9. john1989

    john1989 Guest

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    We are referring to your personal allowance. The allowance you can earn personally for this tax year without paying tax is £10,600

    Has your accountant not helped with your personal tax planning?
     
    Posted: Dec 3, 2015 By: john1989 Member since: Jan 1, 1970
    #9
  10. bambinou

    bambinou UKBF Regular Free Member

    129 0
    Hello,

    Ok I understand, thank you. About the account, I went to see one last year but at that time I was not taking a wage. Will work it out no worry:)
    My main focus at the moment is about director expenses, what I can and cannot claim as I have an office + work from home half half. I have food, electricity(4 big computers on), internet and phone expenses in both places and I cannot work out if I can bill the company for my private home work related expenses.

    Thank you,

    Ben
     
    Posted: Dec 3, 2015 By: bambinou Member since: Mar 22, 2008
    #10
  11. john1989

    john1989 Guest

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    Posted: Dec 3, 2015 By: john1989 Member since: Jan 1, 1970
    #11
  12. Energise Accounting

    Energise Accounting UKBF Ace Full Member

    1,085 173
    I think you should be seeking the advice of an accountant who will have time to go through everything with you and will be able to look at your circumstances personally.
     
    Posted: Dec 3, 2015 By: Energise Accounting Member since: Sep 24, 2014
    #12
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