If a director’s loan account is overdrawn by, say £50k, at year-end and then in the following nine months the following occurs:
- Cash of £30k in total is withdrawn in £1k or £2k increments over the nine months and debited to DLA,
- Interim Dividend of £30k is declared before the nine months is up.
Can this dividend be treated as repayment of £30k of the previous year-end overdrawn DLA?
I know that the bed and breakfast rules do not apply to a repayment that gives rise to an income tax charge on the director shareholder (which the dividend will) but this exemption doesn't apply if the dividend is paid out in cash to the director shareholder.
So my question is, has the £30k dividend “been paid out in cash” or is it only “paid out in cash” if is actually paid when declared?
Sorry if this is dumb question. I had assumed that S455 charge in above example would apply to the whole £50k, as the net movement on the DLA in the following nine months is NIL, but now I am thinking £30k can be treated as repaid?