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Director private car purchased

Director private car purchase

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Hi

Director private car was purchased by company via director loan. What's the entry to record this purchase and entry when director loan is repaid? Is this purchase Benefit in Kind?

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By Jdopus
21st Mar 2019 16:07

If it's marked as a director's loan then the transaction is that the director has borrowed money from the company then used that money to buy a car, so no Benefit in Kind, he just needs to repay the outstanding loan to the company.

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21st Mar 2019 16:11

Dr DLA, Cr Bank on purchase, Dr Bank, Cr DLA on repayment.

The purchase isn't a BIK but the loan might be.

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21st Mar 2019 16:15

The base transaction, if somewhat awkwardly described, is an extremely simple one. That you are even asking it, as well as your additional query about Benefit in Kind, makes it clear you do not know what you are doing with regards to accounts and tax.

Do yourself a favour and put this in the hands of a paid-for professional. They will not only be able to deal with this transaction correctly, they will also be able to help you avoid other pitfalls.

Depending on why the car was purchased by the company, you may already have created a problem that needs unravelling. Don't dig yourself in any deeper.

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21st Mar 2019 16:19

Some of the other respondents are reading this as the company buying a private car on the director's behalf. I am reading it as the company buying a private car from the director, with the money subsequently being repaid to the director. The wording could go either way.

This is another good reason for getting a paid-for professional. A misinterpretation of your situation could lead to entirely incorrect advice. (given in good faith based on a misunderstanding of your positon). A paid-for professional has an incentive to make sure they have the correct facts from you.

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to stepurhan
21st Mar 2019 17:21

Quote:

Some of the other respondents are reading this as the company buying a private car on the director's behalf. I am reading it as the company buying a private car from the director, with the money subsequently being repaid to the director. The wording could go either way.

The mention of "benefit in kind" tips the balance in favour of the former interpretation.

Perhaps the OP would like to clarify.

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to lionofludesch
22nd Mar 2019 08:52

I see your point, but the OP is so vague that I wouldn't rely on anything.

Regardless, I stand by my point that the OP clearly shows they don't have the understanding to do this on their own.

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to stepurhan
22nd Mar 2019 09:34

Quote:

I see your point, but the OP is so vague that I wouldn't rely on anything.

Happily, I don't need to rely on anything in this instance.

I would, however, suggest to the OP that he clarifies his question if he wishes to rely on the replies.

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21st Mar 2019 17:10

Is the director's loan in credit ?

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22nd Mar 2019 09:43

Standard - post a question, asked for further info, doesn't reply.

zzz

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