How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3107
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

My wife and I are directors in a limited company. our

Customer Question

Hi
My wife and I are directors in a limited company.
our year end is 31 July and we have retained profit of c 125k.
We are purchasing a house as we may need a 'bridging' loan of about 100k until our house is sold to complete the purchase.
The anticipated lag between the completion of the house we are buying and the sale of our house is 6 - 8 weeks.
Could we take a loan from the company of c 100k from early August and replace this amount with the funds from the sale of our house by say the end of September without any major tax implications.
Ideally the completion of the houses would be at the same time but this will probably not be possible. We know we can take dividends but fear this may increase our personal tax bill.
Any assistance will be appreciated
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

What you suggest is perfectly permissible, but to be on the safe side I, as a Chartered Secretary, would be inclined to get full formal Board of Directors' approval for the loan and the terms thereof and have it minuted. All such loans to Directors must be cleared within nine months of the end of the company's accounting year to avoid the most horrendous tax consequences, but in the time frame you envisage in your question this should not be a problem.

Any interest charged by the company on the loan would constitute income for Corporation Tax purposes.

There are no tax concequences for you pursuant to the procedure, particularly in view of the very short nature of the proposed transaction.

I do hope that I have been able to set your minds at rest on this matter.

Customer: replied 1 year ago.

Hi Keith

Many thanks that is really helpful.

There is a small chance that the completion of the house we are purchasing could be before our year end say mid July. - therefore the loan would be from mid July to September

Am I correct in thinking this will have significantly more tax implications as the load will be outstanding at our year end (even though the loan would be repaid by September - i.e a miximum period of 3 months).

Kind regards

Expert:  bigduckontax replied 1 year ago.

The rule is that loans to directors by a company in any accounting year must be cleared within nine months of the end of the company's accounting year in which the loan is made. That gives you nine months from July 2015 which, from your follow up question, appears to be the company's year end, ie April 2016. This loan and its repayment would appear to be comfortably under the wire.

Please be so kind as to rate me before you leave the Just Answer site.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3107
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your excellent support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions