Personal Credit Card to make purchases for Limited Company

[19ninety]

My company isn't eligible yet for a company credit card, as it's only a few months old, however I do have a clear personal credit card. Can I use my personal card to make company (stock only) purchases and then simply pay it off as normal from my business account? No personal purchases go on the card as it's not currently used.

 

[Ian J]

In a word - yes

 

[The Byre]

I do it all the time. I have no idea how accounts deals with it, but she seems happy enough, so I shall continue to do so.

 

[UK Contractor Accountant]

I think strictly speaking your company has a liability to Class 1 NIC if it settles your private credit card bill each month unless you hold a sufficient large enough DLA balance to cover it.

 

[The Byre]

I have no idea what any of that means!

 

[TheCyclingProgrammer]

I have no idea what any of that means!

It means exactly what he said.

Don't have your company pay for your credit card bills. Your credit card debt is yours, having it paid off by YourCo can incur a BIK.

If you're buying stuff for the business on a personal card, try and get invoices in the company name of possible and record the amount you paid as a directors loan which can be repaid to you when needed (the company owes you). Having invoices in the company name shows that you were paying on the company's behalf and if you're VAT registered and want to reclaim any VAT its essential you have a valid VAT invoice addressed to YourCo.

If you're using your card for out of pocket employee expenses (ie costs you incur personally doing your job, like travel and subsistence) just keep a record of your expenses and claim it back from YourCo. You shouldn't have to do a P11D for many of these things anymore.

 

[The Byre]

Which reminds me of the time when I was in The Parachute Regiment and an orderly clerk told me that I would have to ask the assessment board for a new P1 or P2 for my BC2 for qualification to LCpl and C-Coy and that my 253 was deficient and that I needed to get that sorted to avoid being on a 252.

Or as Edward Lear wrote -

The Frying-pan said, 'It's an awful delusion!'
The Tea-kettle hissed and grew black in the face;
And they all rushed downstairs in the wildest confusion,
To see the great Nutcracker-Sugar-tong race.
And out of the stable, with screaming and laughter,
(Their ponies were cream-coloured, speckled with brown,)
The Nutcrackers first, and the Sugar-tongs after,
Rode all round the yard, and then all round the town.

 

[TheCyclingProgrammer]

If you don't understand what's being said and you're trying to run a business then maybe you should make an effort to learn.

People are happy to help here but we aren't going to hold your hand.

 

[The Byre]

Plumbing and bookkeeping are the two things in my life where I rely fully on adult supervision!

I can bang on about all things electrical, I have a reasonable knowledge of dogs and horses and can even give you a lecture without notes on digital theory and quantification of analogue signals and their associated error correction. I have even worked out the wind-load of a building in my quest to build the ultimate shed and as for working out the cross-price elasticity of demand for wine and beer, well, I'm your man! I can brew beer and bake bread and make little birds, frogs and boxes in full-contact origami! And if, in a moment of weakness, you want to know the size of the back-hoe and digger market in Poland, well, what can I say? Look no further!

But bookkeeping and plumbing? I assume that a BIK is a Ballcock Induction Key!

 

[MyAccountantOnline]

I think strictly speaking your company has a liability to Class 1 NIC if it settles your private credit card bill each month unless you hold a sufficient large enough DLA balance to cover it.

Just had a quick look on the HMRC website and they state -

''You don’t have to report or pay anything to HM Revenue and Customs (HMRC) if all the following apply:

• you’ve authorised your employee to make the purchase
• your employee makes it clear during the purchase that they’re acting on behalf of your business
• the supplier accepts that the purchase is on behalf of your business''

https://www.gov.uk/expenses-benefits-credit-debit-charge-cards/whats-exempt

 

[MyAccountantOnline]

....I assume that a BIK is a Ballcock Induction Key!

Its Benefit In Kind - here you go if you want a read https://www.gov.uk/tax-company-benefits/overview

 

[TheCyclingProgrammer]

Just had a quick look on the HMRC website and they state -

''You don’t have to report or pay anything to HM Revenue and Customs (HMRC) if all the following apply:

• you’ve authorised your employee to make the purchase
• your employee makes it clear during the purchase that they’re acting on behalf of your business
• the supplier accepts that the purchase is on behalf of your business''

https://www.gov.uk/expenses-benefits-credit-debit-charge-cards/whats-exempt

I believe those rules apply to company provided debit or credit cards.

There is a distinct difference between reimbursing an employee for something they've bought on behalf of the business (regardless of the payment method) and paying an employees personal credit card bill though (which to be fair I don't think OP was proposing).

 

[MyAccountantOnline]

I believe those rules apply to company provided debit or credit cards.

....

The overview states As an employer covering the cost of credit, debit or charge card payments made by your employees, you have certain National Insurance and reporting obligations.

There is a distinct difference between reimbursing an employee for something they've bought on behalf of the business (regardless of the payment method) and paying an employees personal credit card bill though (which to be fair I don't think OP was proposing).

I agree with you on that.

 

[UK Contractor Accountant]

Where payments are made by an employer to third parties in the discharge of the pecuniary liabilities of one of its employees, such payments are the employee’s earnings which count as the employee’s earnings for the purposes of National Insurance contributions and a primary Class 1 liability arises (SSCBA 1992, s 6(1)).

That's to say it should go through the Payroll for the company.

 

[The Byre]

And people say accountancy is boring!

 

[STDFR33]

And people say accountancy is boring!

It is a myth to keep people out of the profession to keep our services in high demand.

 

[UK Contractor Accountant]

 

[19ninety]

I believe those rules apply to company provided debit or credit cards.

There is a distinct difference between reimbursing an employee for something they've bought on behalf of the business (regardless of the payment method) and paying an employees personal credit card bill though (which to be fair I don't think OP was proposing).

Correct, there will only be company stock purchases made on the card, NO personal purchases.

 

[MikeJ]

You may have missed the point.

It's important that the company reimburses you, and you pay off the credit card bill. The company shouldn't pay the bill directly.

 

[MikeJ]

At least, I think that's what they said.

It could be ballcocks.

 

[SteveHa]

I disagree that there would be any BIK, and particularly with the new benefits regime effective from 6 April 2016.

Bottom line, where an employee make good the full cost of the benefit to the employee, there is no reportable benefit. Since, in this case, the full cost has been made good in advance of the "benefit" being made available, so such benefit arises. S.96 ITEPA 2003 Part 3 dictates when a dispensation would be granted in respect of provision of a credit token (which if the company is paying the employee's credit card bill this effectively is), and this situation is covered. WEF 6 April 2016 dispensations no longer exist. Any benefits that would have previously been covered by one are simply not reportable.

 

[UK Contractor Accountant]

At least, I think that's what they said.

It could be ballcocks.

Correct apart from the last bit

 

[19ninety]

Think I'll stick to my original plan of spending little and often and keep building the compaines money up, using a personal card sounds like a headache. Also looking at it different way; larger stock order costs less, but I'd loose that saving paying the interest on the card over the time it takes to sell the stock. So paying a bit more for smaller orders of stock is cheaper in the long run. Thanks for the advise all