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bigduckontax, Accountant
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I run a uk ltd company and have some cash sitting in a uk ltd

Customer Question

I run a uk ltd company and have some cash sitting in a uk ltd company bank account.

I wanted to ask - is it possible to move this money into a personal savings account - then move it back before the end of the accounting year in order to earn interest on the money?

And if so - i'm hoping it would not need to be declared as a dividend or directors loan?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

To do so would create a Director's loan account in the company's books of account. This has an effect on the company's Corporation Tax position, but is largely mitigated if the loan is repaid before the end of the company's accounting period which is what I would most earnestly recommend. Here is HMRC's information on the matter:

'If you pay off your director's loan in full by the last day of your company's Corporation Tax accounting period:

Your company does not pay Corporation Tax on the loan

You don't need to tell HMRC about the loan on your Company Tax Return
For example, your company's accounting period runs from 1 April 2008 to 31 March 2009, and you pay off your director's loan account on 30 March 2009. You don't generally need to include any information about this loan on your Company Tax Return. But from 20 March 2013 you'll need to include it in your Company Tax Return if you either:

Take a further loan within 30 days of (before or after) the repayment

Have arrangements in place for a further loan to be made at the time of the repayment'

See the solution, pay it off just before the end of the company's accounting period. Simple, as the meercat in the TV advert would say!

The interest earned in your personal account in the loan period is of course liable to Income Tax (IT) in your hands and must be declared on your personal self assessment IT return. With interest rates as low as they are at present I wonder if the game is really worth the candle unless substantial sums are involved.

I do hope i have helped you with your problem.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.

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