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Can I pay a personal tax bill through company?

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Hi guys,

I am a director of a limited company and have just received a personal tax bill in the post.

Is it OK to pay the bill through my limited company bank account directly to HMRC? 

Thanks

Replies (38)

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By ireallyshouldknowthisbut
21st Oct 2021 17:57

You can.

but...........there are lots of buts. Speak to your accountant.

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Replying to ireallyshouldknowthisbut:
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By D862021
21st Oct 2021 18:04

Thanks for your reply. I'm guessing you are referring to tax?

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Replying to D862021:
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By Leywood
21st Oct 2021 18:08

Amongst other things, your fiduciary responsibilities.

You and your business are not the same.

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Replying to Leywood:
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By Hugo Fair
21st Oct 2021 18:27

So "You can - but...........there are lots of buts" is shorthand for:
* that single transaction would be the start (not the end) of the matter.

You really do need to speak to your (or your company's if different) accountant.

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By TheNovice
21st Oct 2021 18:25

Yes, it would be money that you owed back to the company though. If you do not repay this within 9m after the year end there will be additional tax consequences of doing so (s.455).

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Replying to TheNovice:
Psycho
By Wilson Philips
21st Oct 2021 18:39

Other possibilities are available.

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Replying to Wilson Philips:
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By D862021
21st Oct 2021 18:50

Thanks for your reply, even if cryptic haha. Please explain?

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Replying to D862021:
Psycho
By Wilson Philips
21st Oct 2021 18:59

Whether or not s455 tax would be in point would depend on other factors. Your accountant will be able to explain.

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Replying to D862021:
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By TheNovice
21st Oct 2021 19:53

D862021 wrote:

Thanks for your reply, even if cryptic haha. Please explain?

People do like to be cryptic on here..

Just to confirm, the company cannot pay your personal tax. The company's money is not yours.

If you do pay the tax via your company you would owe the money back to the company. A simple way, but not the only way to combat this would be to declare the amount as a dividend (if the company has available reserves).

Assume you need £100 worth of tax, you are a basic rate tax payer and you have used your dividend allowance. If you wanted £100 net of taxes (to pay your current tax) you'd need to declare a dividend of £108.10 (£100 / 0.925). You'd then take £100 out of the company, pay the £100 tax and keep the remaining £8.10 until your next tax bill comes around.

As other people quite rightly said, it does depend on your personal circumstances and sp you would be best asking your accountant for their input. It will likely be a simple answer from them, knowing your background.

As a tip because I assume you are not an accountant. Do not spend everything that you take from your company as a dividend. Keep a part of what you have taken from the company aside for your personal tax affairs.

Good luck.

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Replying to TheNovice:
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By meadowsaw227
22nd Oct 2021 09:31

Presumably it also depends on the "state" of the DLA - if in credit no problems.

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Replying to meadowsaw227:
Psycho
By Wilson Philips
22nd Oct 2021 10:33

One of the “other possibilities” that I was alluding to ;-)

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Replying to TheNovice:
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By D862021
21st Oct 2021 18:52

Thanks for your reply. My accountant would sort this for me though wouldn't she. The HMRC accept these payments? It doesn't cause any kind of suspicion with them?

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By adam.arca
21st Oct 2021 18:59

Yes, your accountant can sort that out and, yes, the Revenue will accept payment from anywhere pretty much.

BUT you really need to speak to your accountant BEFORE you do this because there are multiple implications and also so you don’t have to cry over spilt milk after the event. The odds are she’ll say yes but better safe than sorry....

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Replying to adam.arca:
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By D862021
22nd Oct 2021 07:55

Thank you very much for your reply. Yes I'm trying avoid contacting her with trivial issues. Very mixed answers here so it may be best. Thank you.

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Replying to D862021:
Stepurhan
By stepurhan
22nd Oct 2021 08:04

D862021 wrote:

Thank you very much for your reply. Yes I'm trying avoid contacting her with trivial issues.

Why?

You are literally paying them to make sure you don't do anything wrong with accounts and tax. I should also point out that, as many answers have indicated, this is not a trivial issue. The bottom line is you don't know enough to say what is a trivial issue and what isn't. Best to ask the person with the knowledge to make that distinction who you are paying for that knowledge.

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Replying to adam.arca:
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By D862021
22nd Oct 2021 08:01

Thank you again for your very thorough (and non crpytic!) replies. I'm trying to avoid contacting my accountant all the time and to do the research myself where possible.

When you say spilt milk, if the money is taken correctly (my accountant would definitely make sure it was), and the correct taxes were paid etc, what other implications could their be? This is the bit I am not understanding.

I take an amount of money each month, this isn't a salary though, I believe my accountant does it as a dividend.

Thanks

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Replying to D862021:
By ireallyshouldknowthisbut
22nd Oct 2021 09:05

D862021 wrote:

I'm trying to avoid contacting my accountant all the time and to do the research myself where possible.

As an accountant that is about the worst thing you can do.

The best thing you can do is ask them about everything until you do things right.

if they dont like you asking about these sorts of things, get a better accountant.

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Replying to D862021:
Psycho
By Wilson Philips
22nd Oct 2021 10:40

D862021 wrote:
I'm trying to avoid contacting my accountant all the time

Why? Out of the goodness of your heart, or because you’d rather not pay her and try and get the advice for nothing elsewhere?

This might be a bread and butter issue for most accountants but it is exactly the type of issue that you should be discussing with her. Folks here should be able to give you the correct technical answer but your accountant will be far better placed to advise whether it is the “correct” solution in your particular circumstances, which aren’t known by a bunch of internet randoms.

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Replying to Wilson Philips:
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By D862021
22nd Oct 2021 10:44

Because she is very busy and I have asked her a lot of questions lately. She does not charge me for questions like this, so yes, I could "just ask her", but I'm thinking of her and how much she is dealing with.

Thanks.

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Replying to D862021:
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By Tax Dragon
22nd Oct 2021 11:13

Then just pay the tax personally.

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Replying to D862021:
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By DKB-Sheffield
22nd Oct 2021 12:19

FWIW I think you need to agree with your accountant what they feel are 'trivial' matters or not. I'm pretty sure they will not class this as a 'trivial' matter from an accounting & tax perspective. However, I (personally) do not class questions about the best... insurance, marketing, recruitment firms, credit card merchants, utility providers... (just some of the questions that come through on a regular basis) as fundamental to correct accounting and tax treatment. They may be far from 'trivial' to you - just not to your accountant.

We are all busy but, I believe none of us are too busy to deal with genuine client questions. I'd always suggest emailing your accountant (not phoning) to let them decide if your question is important - and how urgent it is. Had you done that prior to posting on here, you'd have probably received a relevant (to you) response by now.

My answer to your initial question... "Yes, you can make a payment for personal tax to HMRC through your Company bank account". The actual question you should be asking is "Is it the right option to pay your personal tax liability through your Company bank account?" and the answer to that can only be provided by someone who knows your personal and company tax affairs - i.e. your accountant".

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Replying to D862021:
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By Calculatorboy
22nd Oct 2021 00:06

So why don't you ask your accountant ?...as you have one

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By Tax Dragon
21st Oct 2021 20:47

Who owns the company?

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Replying to Tax Dragon:
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By D862021
22nd Oct 2021 07:53

Thanks for your reply. I own it.

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By Paul Crowley
22nd Oct 2021 09:22

If this is your main income, then you should be taking a salary at a low level as a tax effective remuneration policy
Your accountant cannot fix that after the event

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Replying to Paul Crowley:
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By D862021
22nd Oct 2021 10:49

Hi Paul, thanks for your reply. I do not take a salary as such not through a proper payroll, but I do take an amount each month, which I think is put through as a dividend.

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Replying to D862021:
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By Paul Crowley
22nd Oct 2021 12:57

If so then you are volunteering for higher overall tax and no qualification credits for state Pension
THAT is not trivial

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Replying to D862021:
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By Southwestbeancounter
22nd Oct 2021 14:48

D862021 wrote:

I do not take a salary as such not through a proper payroll, but I do take an amount each month, which I think is put through as a dividend.

Are you sure?

Or do you just take an amount each month and your accountant 'sorts it'? Or perhaps you have another income source too? I am sure your accountant is not 'allowing' you to take dividends but no salary if your limited company is your only source of income.

As others have said this CAN have major consequences for you.

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By Kaylee100
22nd Oct 2021 10:49

Thing is you are taking your Accountants advice for half the job and keeping the other half quiet from her. So how can they be expected to give you the best advice if they only know half of the story? Your question has an impact its not a standalone question, which I think you think it is.

A lot of answers in our business is "it depends" as most transactions are related in some way to other transactions or organisations. That's why getting advice directed to your own situation is so important. You have an accountant, that's great and a step ahead of many who come on here to ask questions. Don't blow it now...ask them about this and how it fits into your specific situation.

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Replying to Kaylee100:
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By D862021
22nd Oct 2021 10:51

Hi Kaylee. Thank you for your reply, although it seems as if you are implying this is some covert and clandestine arrangement where I am purposely not asking her about this! She is super busy and I have been emailing her a lot lately, so I was just trying to do some research myself, without the benefit of knowing that this issue was quite as complex as it appears to be.

"You should probably speak with your accountant as this is a complex issue" would have sufficed, but I appreciate your reply all the same.

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Replying to D862021:
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By Leywood
22nd Oct 2021 16:38

You are not doing research yourself, you are asking folk to answer your question.

We are all super busy.

There are probably lots of things that you think are not complex that could be, which will no doubt be frustrating the hell out of your Accountant because you dont ask her. Somethings you may think are complex and they are not.

Just ask her.

Ask her every time.

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By Michael Davies
22nd Oct 2021 10:39

Yep but it’s a pecuniary liability,so operate PAYE on the payment.Just thought though,don’t know about putting it through an in credit Directors loan account.Might be getting into “disguised remuneration “;although in all my years never known HMRC picking up on cases like this.

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Replying to Michael Davies:
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By D862021
22nd Oct 2021 10:48

Hi Michael, thanks for your reply. I take money monthly, but this is done via a dividend I believe as opposed to salaried.

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Replying to D862021:
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By legerman
22nd Oct 2021 13:09

D862021 wrote:

Hi Michael, thanks for your reply. I take money monthly, but this is done via a dividend I believe as opposed to salaried.

Do you have another source of income more than £12500 approx? If so, taking dividends makes sense but if not, ask your accountant about taking a small salary.

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Replying to D862021:
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By Leywood
22nd Oct 2021 16:39

You really do need to understand this!

So ask her.

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By pauld
22nd Oct 2021 12:38

This is a common issue. I tell clients not to pay their personal tax from the company if possible. However some just ignore me and it is sorted out via dividend at a later date i.e. when preparing accounts. Others do not have the personal funds and so have to pay it from the company and again usually sorted out at later date.

If you were my client, I would appreciate you dropping an email to me on the lines of 'I don't have enough funds to pay my personal tax. Am I ok to pay it from the company?'. Your accountant will then respect you a lot more for running it by them first. Saying you don't want to bother them is not the way to go.

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By Tax Dragon
22nd Oct 2021 12:45

Just out of interest, why do you have a personal tax bill due for payment in October?

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Replying to Tax Dragon:
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By Paul Crowley
22nd Oct 2021 13:02

I did wonder, but if dividends as only income my guess was late payment of 2nd payment on account.

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