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what is the directors loan subject to s455 32.5%

in the current year?

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hi. quick question:

if the balance b/f in the directors account was £44k and it was repaid by dividends in the current year, but the new balance c/f at y/e is £59k, what is the new loan subject to s455 fo the current year? £59k or £15k (increase in the debit balance in the year?). many thanks. the £59k represents withdrawals in the current year.

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By Matrix
15th Jun 2020 12:58

£59k.

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By Paul Crowley
15th Jun 2020 13:21

See youtube any answers accountingweb re bed and breakfast rules.
Think in tax: was any paid last year?

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By Mr_awol
15th Jun 2020 13:25

Probably neither £44k, £59k, nor £15k.

Depending on types and /or date of repayments, the answer is likely to be less than £59k. The only certainty is that it will not be more than that.

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By lionofludesch
15th Jun 2020 13:52

I vote £59k too.

Provided the £44k was indeed repaid by dividends.

Just checking though - was the charge on the £44k paid over or was the loan repaid inside nine months ?

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Replying to lionofludesch:
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By neanderthal
15th Jun 2020 14:48

b/f loan covered by dividends within 9 months.

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By Paul Crowley
15th Jun 2020 15:39

Critical to understanding the question. Still recommend waching Tim Good. Clearly now year end balance

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Replying to Paul Crowley:
RLI
By lionofludesch
15th Jun 2020 15:42

Unless the new loan is repaid within nine months .....

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By Mr_awol
15th Jun 2020 16:12

lionofludesch wrote:

Unless the new loan is repaid within nine months .....

Exactly my point as to why it's a maximum of £59k but quite probably isn't that amount itself.

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By Paul Crowley
15th Jun 2020 16:22

I always wait for evidence of genuine repayment, and query extra loans. If he took out £59k last year, probably doing the same this year.
Tax filing deadline 3 months after the 9 months in question. I suggest to clients avoid loans if they wany to keep their limited liability

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By Paul Crowley
15th Jun 2020 16:28

Company charging interest or P11d?

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By whitevanman
15th Jun 2020 17:08

Strictly speaking, the year end balances are irrelevant to the question of what amount is "subject" to S455.
The correct answer is, the amount of any loans made in the year, irrespective of when repaid.
If looking for the amount on which S455 tax is payable, you do reduce the initial amount of loans made, by the amounts repaid in the period ended 9 months after the year end.
Generally speaking, credits are taken as repaying the earliest loans on a FIFO basis but that is subject to the B&B rules.
The balance shown by accounts may not give the correct answer. I have seen many instances where the a/cs are drawn up more than 9 months after the AP end and credit, say, a final dividend to DLA. That credit falls due after the 9 month point and so, for these purposes the YE balance is "incorrect".

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By Matrix
15th Jun 2020 18:14

I think the £59k goes in section A10 and any amounts cleared within 9 months go into section A25 and the balance is the amount taxable. So the figures last year would have been £44k in both boxes and no tax as the balance outstanding was nil.

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By frankfx
15th Jun 2020 22:06

Study the HMRC director loan toolkit.

Useful to have on the client tax file, as part of compliance due diligence.

At least you can inform client that HMRC have gone to the trouble to prepare and publish the toolkit.
Risk of error has been identified by HMRC.

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By Carl London
16th Jun 2020 08:03

Here's the video link mentioned above, definitely worth a watch -
https://www.accountingweb.co.uk/tax/personal-tax/any-answers-answered-di...

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