Director Archives - Southside Accountants Wimbledon

Directors Loan Accounts

Directors loan accounts in small companies is one of the key areas which the taxman likes to investigate.

It is also an area that most clients do not clearly understand. I hope the this blog post will help in ensuring that directors keep taxman at bay and the company pays the minimum amount of tax within the law.

How does the Director’s Loan Account work?

If a director pays money into the company, it is accounted for in the Director’s Loan Account which is then deemed to be in credit. Withdrawals can also be made, and if the account remains in credit, there are no tax implications.

It is when the account goes overdrawn that potential tax issues arise as the overdraft is seen as an interest-free loan…. Continue Reading

Question and Answer – non-executive director

Feb10

Q. I am a non-executive director of a number of companies. Can I offer consultancy services to those companies on a self-employed basis?

A. You can offer your services to those companies on a self-employed basis, but you need to have a clear contract which distinguishes your work as a consultant from work you do as a director. The self-employed tasks need to be invoiced separately and declared to HMRC as a separate business from your fees as a director.

Generally the fees for work you perform as a director should be taxed under PAYE. Legislation introduced in the Finance Act 2013 requires the IR35 provisions to apply to work done as officers where that work is charged through a third party, such as a personal service company.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Buying car being Director

Nov26

Q. My company is doing well and I’d like a new car, possibly a BMW series 5. Should the company lease or buy this car, or does it make more sense for me to take a dividend from the company and to buy the car personally?

A. As the car is available to you for personal journeys you will be taxed on the ‘benefit’ of driving that car giving rise each year to a tax bill for yourself and a NI bill for your company at 13.8%.

The company will get a deduction against profits for the cost of leasing the car, but that deduction is limited if the car has CO2 emissions over 160g/km (reducing to 135g/km from April 2013). Likewise the capital allowances are restricted for cars with CO2 emissions over 160g/km. The company can pay for the car’s insurance, servicing and repairs, with no further cost to you, the driver. However, if fuel is provided there is an additional benefit in kind to be taxed on you.

In reality the calculations need to take into account other factors such as the cost of insurance and whether you need to borrow money to buy the car.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.