Save content
Have you found this content useful? Use the button above to save it to your profile.

Any Answers Answered: Directors’ loans and transition profits

by

TAXtv’s Giles Mooney and Tim Good are back to tackle two questions from the pages of Any Answers, this time on directors’ loans and transition profits.

8th Jun 2023
Save content
Have you found this content useful? Use the button above to save it to your profile.

To view the full questions and AccountingWEB readers’ answers click on the links below.

Are class 1A NICs due on the entire amount of a director’s loan?

Our first question came from petercooperuk who had a query about director’s loan accounts. He had encountered this in a guide: If the loan outstanding is over £10,000 then 13.8% of the entire amount is liable to Class 1A employers’ NICs.

He asked: “Of the entire amount? So if a DLA were overdrawn by £15k for a week and then repaid, the company would have £2,070 of 1A NICs to pay? That doesn’t sound right or appropriate given it was entirely repaid.”

Transition profits over five years

Our next question came from chancewind who asked: “Has HMRC told us exactly how this transitional profit will be taxed? Will the extra profit be taxed over five years by some system or will the whole profit for the extended period be taxed over five years?  Presumably class 4 will be split the same?”

For the latest episode of TAXtv visit PTP Interactive.​ TAXtv is a monthly tax update programme available as an annual subscription (11 issues plus budget editions) to view online, download from the internet or watch on DVD.

Replies (1)

Please login or register to join the discussion.

avatar
By saalak39
12th Jun 2023 06:22

Our first question came from petercooperuk who had a query about director’s loan accounts. He had encountered this in a guide: If the loan outstanding is over £10,000 then 13.8% of the entire amount is liable to Class 1A employers’ NICs.

Thanks (0)