Directors loan in year end accounts

**LondonManc** · 27 November 2015, 11:35

Originally posted by SailorSam View Post

I made a mistake with my payroll last year and overpaid my salary by £500, and this wasn't noticed at the time. My accountant has picked this up and in the year end accounts it states a Directors Loan balance of £500. So far, no problem.

But in the accounts it also states that the total amount loaned to me was £xx,000 where £xx,000 is the total of all salary and dividends paid to me in the year, and is significantly higher than £500. It also says I re-paid a total of £xx-500, so that the balance is correct.

I'm not happy with my accounts saying that I was loaned £xx,000, even if it says I did re-pay it. I think it looks dodgy. Accoutant is adamant that this is what must be done. Any second opinions out there? and should I just let this go?

Second opinion? Ask another accountant. You're paying him for his advice. If you think it's dodgy, ask another accountant. What qualifies you to suggest he's wrong?

**Louisa@InTouch** · 27 November 2015, 11:49

Dividends should be shown in your accounts as 'dividends paid' as and when they are declared.

So, they should not be going through your Director Loan Account.

However it might be that at the moment, you are taking lots of payments which are all being allocated to the Director Loan Account in the year. Then at the year end a dividend is being declared.

Ideally, you should try a more structured approach through the year to avoid this. Pay salary and dividends separately, keep the dividend documents and then make sure these are shown as dividends paid during the year.

As for your accountant, if you do have dividend documents, send them across and get your Director Loan Account amended as this could also have benefit in kind implications later on down the line...

**SailorSam** · 27 November 2015, 15:25

Originally posted by Louisa@InTouch View Post

Dividends should be shown in your accounts as 'dividends paid' as and when they are declared.

So, they should not be going through your Director Loan Account.

However it might be that at the moment, you are taking lots of payments which are all being allocated to the Director Loan Account in the year. Then at the year end a dividend is being declared.

Ideally, you should try a more structured approach through the year to avoid this. Pay salary and dividends separately, keep the dividend documents and then make sure these are shown as dividends paid during the year.

As for your accountant, if you do have dividend documents, send them across and get your Director Loan Account amended as this could also have benefit in kind implications later on down the line...

Thank you. Two dividends were taken during the year, and both were paid after immediately after the accountant had raised the divi docs, and both were declared/paid within the financial year. I made no payments to myself in the year other than the two divis and the payroll

It's the implication of the entries going through the Directors Loan that bothers me.

**TheCyclingProgrammer** · 29 November 2015, 17:42

If you were paid a salary and ran a payroll those payments should not appear on your DLA.

If you took dividends and all the paperwork was in order and they were declared properly then those payments should not appear on your DLA either.

If, as Louisa says, payments were taken and a single dividend declared at the end of the year then yes these payments would appear on the DLA.

If the DLA is shown as more than £10k overdrawn then there is the further problem of there being a BIK (unless interest was charged on the loan) which could create an additional liability.

Ask your accountant why your properly declared dividends are being shown as loans.

Directors loan in year end accounts