Personal Credit Card for Business Transactions

[craigbrass]

Hello Guys,

I am after somebody confirming something for me one way or the other so I know for sure.

As a limited company, the general "done thing" is to get a corporate credit card for business purchases. What I am wondering is it ok to get a personal credit card and use it SOLELY for business purposes (ie to the point where it is paid off in full every month using direct debit directly from the limited company's account)? The reason for doing this would be threefold :-
1. The company cards we currently use have a £32 yearly fee per card.
2. If we get a Play.com credit card, we can end up getting lots of vouchers for use at Play.com.
3. We also currently have fuel cards from BP. We could get rid of these and get an additional card holder on the card for each user and thus generating more points to get more vouchers and allowing filling up at Tesco, etc which is generally cheaper than BP for both petrol and diesel.

I suppose what I am really asking is if it ever came to an inspection by the tax man, is he likely to mind?

 

[QuickHomeBuyers]

Keep all your personal cards as long as you can afford them. Do business purchases from your card and give it your accountant.

Company will then pay you back as a direcotrs loan which I believe is tax free.

Its your loan, you get it back when you want it and your company can afford it.

 

[craigbrass]

That wasn't what I was asking though. I was asking if there would be any questions asked (ie if it came to an audit or anything) if I was using a personal credit card SOLELY for business purposes with the direct debit for the full payment taken from the business account every month. As mentioned, the reasons for doing this are to save on fees for business credit cards and to get something back (like all the Play.com vouchers you get from using that card)?

 

[QuickHomeBuyers]

You can go London via Birmingham or via Bouremouth you still arrive in London.

 

[craigbrass]

Gotcha. Thanks.

 

[QuickHomeBuyers]

Gotcha. Thanks.

Given the choice, I would keep personal and business seprate and would rather claim directors loan payment instead of DD from business account.

 

[craigbrass]

The problem is we want ALL company purchases to go on these cards so claiming directors loan payments is a little harder (more work). The whole point is we wish to get rid of the cards we are charged for and use a free card which gives us something back as well as mentioned above.

 

[QuickHomeBuyers]

Ihavnt tried the DD thing ever. However there was another thread on here with same question, will try to find it.

Your monthly didvidends can contain an element of directors loan.

 

[IanBrewster]

Craig

Remember that on a personal card YOU will be responsible for the debt, not the company. If it was me, I'm not sure that I would want other employees charging to my personal credit card.

from the tax man's point of view, as long as all the records are there he should be happy.

 

[Newbie22]

You can go London via Birmingham or via Bouremouth you still arrive in London.

love it!

 

[MrPAYE]

HMRC will look at credit card expenditure during an audit but you will be fine so long as all expenses on all cards are legitimate business expenses - and you can prove it. It doesn't matter to HMRC if the company is reimbursing corporate or personal cards.

The problems start when the cards are automatically paid by the company with little/no analysis or formal expense claims made by directors/employees before payment is made. HMRC may challenge that some payments are personal expenses which may be difficult to resist where no backup documentation exists.

 

[Richmedia]

However, I may be wrong but if you use a personal credit card for a business expense which you then pay back through the directors loan account any vouchers or points you gain become a benefit in kind and must be taxed?

Another thing you will miss if you stay with a personal credit card is a lack of creditworthiness building up against your limited company. The first thing most suppliers or traders do before business is check your credit rating a business credit card really helps move those points .

 

[benjamin_c]

I have a question on this actually, assuming i was using my personal credit card for business and keeping all reciepts and then claiming back the amount paid, all fair and reasonable, but! what if it was a rewards/cashback credit card? would i have to declare the vouchers/cashback as income? as this could result in about £200 worth of vouchers every month (1% rebate on about £20k a month) this reward wouldn't be referenced on the statment and the card 'although personal in the MD's name' would only be used for business purchases and all statments and reciepts kept for company reference.

 

[WJP]

As far as I'm aware, the rewards should be declared as a BIK. One of the accountants will come along soon and clarify it for you I'm sure...

 

[benjamin_c]

I thought as much!! thought i was going to get a little freebee then

 

[David Griffiths]

I don't see why the rewards should be declared as a benefit in kind. It's a personal credit card, so the rewards are not provided by the company, directly or indirectly. They are not provided by the card company as a third party in connection with your employment

If you incur interest on the charge card, or if you paid by cheque and incurred bank charges those would not be claimable from the company (not tax free, anyway) If you paid in cash but had to pay an ATM fee to get the cash, that's not claimable.

I suppose that the pedantic view point is that a £10 payment hasn't really cost you £10.00 but only £9.90 if you have a 1% reward on it. To me that would be nit picking of the highest order. People have been claiming petrol expenses for years and I've never even seen an inspector ask if there were Green Shield stamps on the purchase, or a free glass with four gallons (Offers that will be more familiar to older members!)

 

[MrPAYE]

The rewards are not taxable on a personal card even where the card has been used solely for business expenses.

There has been no actual cost incurred by the employer, or any other party so no BIK can arise courtesy of the well established Pepper v Hart principle (marginal cost).

 

[benjamin_c]

WOW thats really good i will certainly be taking advantage of that one

 

[Karimbo]

BIK of a fraction of a penny per pound is more hassle than it's worth. I just avoid handing my nectar card when i make business purchases at supermarkets.

Obviously, there are some cashback schemes that will never declare the cashback in any way, such as quidco.com which in effect pays out affiliaite comission directly to buyers - it's up to you if you want to do BIK on them.

Nobody has addresses the CC company POV here. I asked this question on a moneysaving website and it was a firm no. Personal CCs come with 16month+ interest free periods sometimes, cashback deals and 0% balance transfer deals, they are designed to catch the consumer out and get them to become loyal and pay interest.

Business owner are more shrewd so banks will never offer business owners 0% interest free peiod of 12+ months.

So you will be commiting minor application fraud if you say it's for personal use and not business in your personal CC application - obviously they shouldn't find out. But I would ensure that the money passes through a personal curent account to the cc account. Because a direct debit from your company account with a name like My Company Ltd will raise a few flags if your cc account gets reviewed by their staff.

p.s. i know this is an old thread bump. I thought id chime in a few words, i was just googling for 0% business credit cards when i stumbled onto this thread. There seems to be no business credit card offering 0%. I think it's important to get the direct debit issue sorted first and foremost.

 

[Karimbo]

So in order to deposit funds to the CC, do this:

Ltd company bank account ---> newly created personal current account --> credit card account.