Directors Loan and Offset Mortgage
Discussion
I've never used a Director's loan account but considering options with a house purchase imminent. Is this possible/legal?
- Get offset mortgage of 500K for new house at, say 5%
- Take director's loan of 500K, placed in to the account linked to the mortgage therefore allowing me to pay no interest on the mortgage while paying off the repayment side as much as possible
If I pay the company 2.25% interest on the loan am I correct that it would not count as a BIK?
Am I correct that I have to repay the 500k loan within 9 months of the end of the company accounting period, but could then wait 30 days and take another one?
I must have the above wrong as on the face of it it seems like a decent option
- Get offset mortgage of 500K for new house at, say 5%
- Take director's loan of 500K, placed in to the account linked to the mortgage therefore allowing me to pay no interest on the mortgage while paying off the repayment side as much as possible
If I pay the company 2.25% interest on the loan am I correct that it would not count as a BIK?
Am I correct that I have to repay the 500k loan within 9 months of the end of the company accounting period, but could then wait 30 days and take another one?
I must have the above wrong as on the face of it it seems like a decent option
ParkerTalbot said:
I've never used a Director's loan account but considering options with a house purchase imminent. Is this possible/legal?
- Get offset mortgage of 500K for new house at, say 5%
- Take director's loan of 500K, placed in to the account linked to the mortgage therefore allowing me to pay no interest on the mortgage while paying off the repayment side as much as possible
If I pay the company 2.25% interest on the loan am I correct that it would not count as a BIK?
Am I correct that I have to repay the 500k loan within 9 months of the end of the company accounting period, but could then wait 30 days and take another one?
I must have the above wrong as on the face of it it seems like a decent option
Corect about the BIK.- Get offset mortgage of 500K for new house at, say 5%
- Take director's loan of 500K, placed in to the account linked to the mortgage therefore allowing me to pay no interest on the mortgage while paying off the repayment side as much as possible
If I pay the company 2.25% interest on the loan am I correct that it would not count as a BIK?
Am I correct that I have to repay the 500k loan within 9 months of the end of the company accounting period, but could then wait 30 days and take another one?
I must have the above wrong as on the face of it it seems like a decent option
VERY incorrect about clearing the loan within nine months and immediately taking out another one.
HMRC takes a very dim view of that type of carry on and you would be in a world of trouble with both HMRC and Companies House.
It's years since I've ever had a Directors loan but regardless of how it's dealt with it will in all probability elicit an Aspect enquiry from HMRC and despite what every accountant has ever told me, they are not limited to just an aspect.
So if the happens to have purchased a 90 inch TV and expensive sofa's and sold them to the director at scrap value, make sure every bit of your recent history is spick and span because they immediately tag team with PAYE local compliance if the company employs staff as this is ultra low hanging fruit.
Again no doubt some Accountants on here will say I'm paranoid, it's a money making scam from start to finish.
All the top Tax firms use ex HMRC Inspectors and most accountants don't have the time and pass you on to a specialist.
The local compliance officer who was horrific turned up years later as a specialist in the Firm I used to negotiate on my behalf
So if the happens to have purchased a 90 inch TV and expensive sofa's and sold them to the director at scrap value, make sure every bit of your recent history is spick and span because they immediately tag team with PAYE local compliance if the company employs staff as this is ultra low hanging fruit.
Again no doubt some Accountants on here will say I'm paranoid, it's a money making scam from start to finish.
All the top Tax firms use ex HMRC Inspectors and most accountants don't have the time and pass you on to a specialist.
The local compliance officer who was horrific turned up years later as a specialist in the Firm I used to negotiate on my behalf
Edited by DaveA8 on Tuesday 26th March 11:15
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