director loan question in new business

[steebo888]

hello there

im starting a new business which will be a ltd company with 28k of my own money.

Am i right in saying the 28k can be put down as a directors loan into the company and if i draw out against this then there will be no tax implications?

also how long can the loan last for?

cheers

[burwoodman]

Yes. Don't listen to any teeth sucking opinions on here. 100% yes

[steebo888]

cheers

forgot to say that 23k is to buy the business and 5k for working capital and solicitors fees

is all 28k still ok as director loan?

[burwoodman]

Yes because you are buying assets with cash or debt. Chat to your accountant but all good

[sumo69]

The loan can be indefinite and it can also be made with an interest charge option - your choice really.

Depending on whether you would have any other taxable income, it may be preferential to extract a small salary and some dividend rather than solely repaying the loan.

Have you sat down with an accountant to go through this?

David

[PurpleMoonlight]

steebo888 said:

cheers

forgot to say that 23k is to buy the business and 5k for working capital and solicitors fees

is all 28k still ok as director loan?

You will need to explain how you are structuring these.

Are you buying the Ltd shares of the existing business?

If not, are you establishing a new Ltd which will then be purchasing the trade and assets from the extsting business?

If so, is the money you are putting into your Ltd purchasing shares or deemed a loan?

[steebo888]

PurpleMoonlight said:

You will need to explain how you are structuring these.

Are you buying the Ltd shares of the existing business?

If not, are you establishing a new Ltd which will then be purchasing the trade and assets from the extsting business?

If so, is the money you are putting into your Ltd purchasing shares or deemed a loan?

Hi

buying an existing sole trader business and creating a new ltd company.

23k is for the purchase or the lease (2k towards equipment)

5k for sols fees and operating cash

i will be only director and i think shares will be set at £100 total

[PurpleMoonlight]

Okay, in that case the £28,000 you put into the Ltd will be deemed a director loan and you can withdraw it free of income tax & NI whenever you like.

[OdramaSwimLaden]

steebo888 said:

hello there

im starting a new business which will be a ltd company with 28k of my own money.

Am i right in saying the 28k can be put down as a directors loan into the company and if i draw out against this then there will be no tax implications?

also how long can the loan last for?

cheers

Yes.

We're all assuming it your own money and in the bank tax paid though.