Discussion
Horse_Apple said:
Sorry to join the masses seeking free advice 
Scenario:
£1M Cash (net of CT) left in wholly owned company as not needed.
£500 Offset mortgage on privately owned property on the director.
Can the company, lend the director £500K and he use this to effectively fully offset his mortgage?
What's the value of the director's current account? If it's large enough to withdraw the amount then not a problem, however, I suspect that's not the situation.Scenario:
£1M Cash (net of CT) left in wholly owned company as not needed.
£500 Offset mortgage on privately owned property on the director.
Can the company, lend the director £500K and he use this to effectively fully offset his mortgage?
http://www.hmrc.gov.uk/manuals/emmanual/em8565.htm
If the company "lends" the money to the director, the company will be charged Section 419 Penalty Corporation Tax on the balance on the loan at the end of the company's financial year end date.
The director will be charged Income Tax under the Benefit in Kind PAYE rules.
Obviously, as has been stated, if the company already owes money to the director, then the amount owed to the director can be repaid in full without any problems. It's only when the Director's Loan Account goes "overdrawn" that the Revenue get shirty.
The director will be charged Income Tax under the Benefit in Kind PAYE rules.
Obviously, as has been stated, if the company already owes money to the director, then the amount owed to the director can be repaid in full without any problems. It's only when the Director's Loan Account goes "overdrawn" that the Revenue get shirty.
Eric Mc said:
It's only when the Director's Loan Account goes "overdrawn" that the Revenue get shirty.
It's possible to withdraw the money, offset it against the mortgage and repay it before the company year end so it doesn't appear as a loan on the accounts. This is dodgy ground and the Revenue 'may' call in a benefical loan, based on what the average overdrawn balance is throughout the period the director has the money in his posession.In theory.
In reality, chances are minimal.
But that's not advice.
Dirty Boy said:
Eric Mc said:
It's only when the Director's Loan Account goes "overdrawn" that the Revenue get shirty.
It's possible to withdraw the money, offset it against the mortgage and repay it before the company year end so it doesn't appear as a loan on the accounts. This is dodgy ground and the Revenue 'may' call in a benefical loan, based on what the average overdrawn balance is throughout the period the director has the money in his posession.In theory.
In reality, chances are minimal.
But that's not advice.
Edited by Eric Mc on Thursday 4th December 08:14
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