If anyone can help would be great.
A client has a 60K director's loan at the end of financial year. Nine months after year end is approaching fast and no cash to repay the full amount. Obviously he doesn't want to pay 25% tax.
My question is, can the loan be repaid by declaring dividend? Or does he actually has to pay 60K into company's bank account?
Replies (3)
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Dividend will work
As long as the company has sufficient reserves out of which to declare it.
Anti B&B
In fact div would be better, as if any actual repayment was shortly followed by subsequent withdrawals. it would then be ineffective to that extent in preventing s.455 charge, as consequence of the extended anti B&B rules introduced by FA13, effective from 20/03/13.
tax
They will be liable to higher rate tax on the div where as the s455 tax is refundable.