Directors Loan to pay off personal tax liability

Didn't find your answer?

Quick question. My directors are taking a dividend holiday this year (apr16-mar17). Are they able to take a directors loan in Jan17 to pay their personal tax liability from apr15-mar16. They will then declare a dividend to repay the DL in Apr17.

 

Thanks a lot

Replies (6)

Please login or register to join the discussion.

By stratty
08th Dec 2016 10:14

The directors should speak with their accountant.

Thanks (1)
By johngroganjga
08th Dec 2016 10:15

Your question reads rather oddly - as if from a talking company.

Assuming you are not the company, what is your role in relation to the directors and the company they are directors of - in particular are you their accountant or tax adviser, or is that someone else?

Thanks (1)
avatar
By joes
08th Dec 2016 10:24

Sorry, I guess it does read oddly reading it back. I'm the management accountant. probably best to suggest they speak to our external accountants.

Thanks (0)
Replying to joes:
By johngroganjga
08th Dec 2016 10:44

The simple answer is that they can certainly borrow money from their company if they wish, provided that they do not leave the company short of cash as a result and that all the shareholders (if there are any others) are content for them to do so.

But they need to be aware of the reporting obligations that will arise in the next accounts and on the tax consequences of what they propose to do. They should get that input from their external accountants.

If the loans are to be repaid as quickly as you say, the tax consequences are likely to be inconsequential if properly managed.

Thanks (1)
Replying to johngroganjga:
avatar
By joes
08th Dec 2016 11:04

Appreciated.

Thanks a lot.

Thanks (0)
avatar
By bumpdinkwhallop
08th Dec 2016 20:22

How much are the loans to pay their SA liabilities?? Also have they taken or will they take any other "Loans" in the 16/17 tax year?

Infact just click on these links and this should give you a general idea of any tax implications. Namely BIK and S455 tax implications

https://www.gov.uk/directors-loans/overview

https://www.gov.uk/government/publications/hmrc-directors-loan-accounts-...

Thanks (0)