Company repay Director's Loans with Stock Assets?

DLAs are in credit. Winding down ready for dissolution.

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Hi,

We're a 2 director company, currently in the process of winding down as we would like to dissolve & carry on as a partnership for simpler accounting.

When we set up the business we funded it via Director's Loans. These accounts have not yet been repaid by the company. We have approx £3k in the business bank account & £3k in stock. We will carry the stock forward into the partnership.

As we are winding down & splitting the assets, I'm wondering if we can:

  • split the remaining bank funds & distribute back to us both, tax-free, as part repayments on the Director's Loan Accounts?
  • distribute the remaining stock back to us as part repayments on the Director's Loan Accounts so as to reduce the Creditors figure on the final balance sheet?

Thanks in advance.

Replies (11)

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By Duggimon
31st Mar 2020 08:46

If the company owes you money then repayment of that debt isn't taxable.

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Replying to Duggimon:
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By rlm8406
31st Mar 2020 17:09

Thanks for the reply Duggimon. I'm aware that repayment of the DLA isn't taxable, my confusion is just whether the stock asset can be used as a means of repaying the DLA?

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Replying to rlm8406:
By Duggimon
31st Mar 2020 17:17

If you were aware of that then why did you ask if repayment of the loan was taxable?

In any event, it doesn't matter whether the company pays you in cash or in assets. The assets have to be transferred at market value.

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Replying to Duggimon:
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By rlm8406
31st Mar 2020 17:27

I didn't ask if repayment of the loan was taxable. My query was with regards to the remaining assets being split between directors via the DLA.

Either way, you've been very helpful & answered my question. Appreciate your help.

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By Truthsayer
31st Mar 2020 09:45

If you have all this cash and stock, you can easily afford to pay your accountant to advise.

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Replying to Truthsayer:
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By rlm8406
31st Mar 2020 17:10

Pretty sure my accountant won't accept stock as payment.

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Replying to rlm8406:
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By andrew1211
01st Apr 2020 08:18

Hi might if it were whiskey or a classic car!

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By andrew1211
31st Mar 2020 10:06

Yes and yes

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Replying to andrew1211:
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By rlm8406
31st Mar 2020 17:11

Thanks Andrew. Appreciate your response.

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By Tax Dragon
01st Apr 2020 09:10

It may be the way I am reading the question, but it sounds as if the company has more debt than it can afford and that you are prioritising repayment of your own loans.

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Replying to Tax Dragon:
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By rlm8406
01st Apr 2020 17:17

The only debt the company has is to the 2 directors.

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