Directors Loan query

[filthy1980]

read this thread and yesterday and immediately called the accountant, turns out er-in-doors can also take a directors loan )

much needed monies for the house fund

[northernladuk]

read this thread and yesterday and immediately called the accountant, turns out er-in-doors can also take a directors loan )

much needed monies for the house fund

Any chance you can splash out on one of these as well?

[TheCyclingProgrammer]

read this thread and yesterday and immediately called the accountant, turns out er-in-doors can also take a directors loan )

much needed monies for the house fund

I'm assuming she's a shareholder or company officer in her own right, otherwise any loan to her would probably be treated as a loan to you for the purposes of the BIK limit.

If she is then don't forget you still need to repay these loans within 9 months of your company year end or you'll have tax repercussions. A director's loan can be useful for getting access to some money in advance of actually declaring a dividend but it is only kicking the can up the road as far as tax goes...

[Gomez]

Reading this whole thread with interest. I'd like to make a loan to my spouse who is also a shareholder but not a director. My accountant seems to think there will be BIK and NI issues doing this even if the loan is for under £10k. The loan would be paid off within 9 months of the company year end. Has my accountantant got it wrong? I should also add that I intend to also take a directors loan in addition to this which would also not exceed £10k and be paid back within the 9 months.

[northernladuk]

Reading this whole thread with interest. I'd like to make a loan to my spouse who is also a shareholder but not a director. My accountant seems to think there will be BIK and NI issues doing this even if the loan is for under £10k. The loan would be paid off within 9 months of the company year end. Has my accountantant got it wrong? I should also add that I intend to also take a directors loan in addition to this which would also not exceed £10k and be paid back within the 9 months.

Erm.. A DIRECTORS loan to someone who's NOT a director???

This type of loan is discussed from time to time including here..

https://forums.contractoruk.com/acco...tors-loan.html

General advice is don't.

[Gomez]

Erm.. A DIRECTORS loan to someone who's NOT a director???

No. I should have made that clearer. It would be a "loan to participators" as the CyclingProgrammer pointed out earlier in the thread.

[TheCyclingProgrammer]

You can make a short term loan to a shareholder. All of the usual rules apply just the same.

https://www.accountingweb.co.uk/any-...or-shareholder

A “participator” may be a company officer or shareholder.

As I mentioned earlier, I’d be very careful about using loans to yourself and a spouse as a way of dodging bed and breakfasting rules as I suspect HMRC would successfully challenge this.

[Gomez]

You can make a short term loan to a shareholder. All of the usual rules apply just the same.

https://www.accountingweb.co.uk/any-...or-shareholder

A “participator” may be a company officer or shareholder.

As I mentioned earlier, I’d be very careful about using loans to yourself and a spouse as a way of dodging bed and breakfasting rules as I suspect HMRC would successfully challenge this.

Many thanks for this. It seems that 'Bed and Breakfasting' is the practice of taking a loan, repaying it and then taking it out again. This is not my intention. It would be purely to take it out as a one off and pay it back asap. On this basis, you appear to be saying it is OK (I will of course check with my accountant :-)). Of course, personal circumstances can change and I appreciate that the taking of loans is not generally a good idea.

[craigy1874]

I would say making loans to a spouse who isn't a director, means the loan is assessed on the spouse who is a director.

How can you possibly justify a benefit in kind for a non-director spouse? I mean you wouldn't give your non-director spouse a company car and expect them to incur the taxable benefit, so why would a loan be any different?

[TheCyclingProgrammer]

I would say making loans to a spouse who isn't a director, means the loan is assessed on the spouse who is a director.

How can you possibly justify a benefit in kind for a non-director spouse? I mean you wouldn't give your non-director spouse a company car and expect them to incur the taxable benefit, so why would a loan be any different?

Because the spouse is a shareholder and is entitled to take a loan subject to agreement by all relevant parties and the usual rules regarding participator loans. Read the rest of the thread.

https://www.whitefieldtax.co.uk/help...-shareholders/