Paid myself unwarranted £10k - now what?

[cj90210]

Hi folks,

A few months ago and due to a very urgent circumstance I transferred £10,000 from my Ltd company bank account to my own. I had no other practical choice at the time and was fully aware that I would have to deal with the consequences of this. I am trying to work out the best way of "paying" this back. I don't take any salary from my Ltd at this time but am incurring around £1,000 worth of expenses (mileage, accommodation, food and standard home/office bills) per month right now. I have alternative permanent employment within another industry (they needed a training bond, the £10k) which pays me enough to survive but am currently on the bench (employer needs me but cannot train me right now hence I'm free to contract within IT).

Option 1.) Continue to claim my personal expenses but simply don't pay from Ltd company to myself for the next approx 10 months
Option 2.) Claim and pay myself what I'm due and then return one big lump sum at the end (to keep it neat and easily traceable, more than anything)
Option 3.) Just take it as a loan and pay back when I can.

Option 1 and 2 are simple enough to understand though I'd like your views. Option 3, what kind of tax implications could this have if I need the loan for the next year? What if I pay it back "as a loan" before April

Thanks

[MrButton]

What does your accountant say?

[TheCyclingProgrammer]

The first thing you need to realise is that the money you took can only really be accounted for as a director’s loan so it should be represented as such in your accounts. Fortunately it’s just on the BIK threshold.

Next you need to be aware of the implications of having this loan outstanding. Any balance left outstanding 9 months after your company year end will be liable to a temporary corporation tax payment (s455) which will not be repaid until you have paid off the loan so you should try and avoid this if at all possible.

If you have legitimate expenses to claim from YourCo you should do so and simply show them as being paid by way of a credit to the loan account and reducing the loan balance.

You should speak to your accountant about the best way forward in repaying the rest of the loan. If you have sufficient profits you may be able to declare a dividend to clear it. You can also pay yourself a salary to clear the loan but you’ll need to operate payrol. Either of these options will have personal tax implications that your accountant should explain to you.

The only option for repaying that has no further tax implications is to simply repay the loan from your existing personal savings if you are able to do so.

[jamesbrown]

The only thing I'd add to the above, other than getting advice from an accountant (and you should have one!), is that you may already have exceeded the BIK threshold of 10k, since the threshold is for the total value of all outstanding loans at any time during the year, not any one loan. If you haven't, bear that in mind going forward.

[cj90210]

Thank you for your input all

[MB2]

if your not earning any money as salary PAYE could be an option, you would pay a little NI but no tax as below 11,800 overall for the year ?

Might be easier than the DLA option if you won't be earning a salary or can avoid it.