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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5785
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I have got business loan as a director in a limited company

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Hi I have got business loan as a director in a limited company can I use this business loan to clear my personal loan ?
Assistant: Have you talked to a tax professional about this?
Customer: Not yet
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: No

Hello and welcome to JustAnswer. I am here to help you. Please expand on your statement .. do you intend to use business funds to clear personal debt and I will respond to you shortly.
Many thanks

Customer: replied 5 months ago.
I have used the personal loan for business if not directly indirectly
Customer: replied 5 months ago.
Paid the rent by cash and paid deposit by cash
Customer: replied 5 months ago.
Now I have got business loan is it possible can I use it to clear my personal loan
Customer: replied 5 months ago.
I have started the company in 2017 August
My tax is due to pay this may 2019
Customer: replied 5 months ago.
I want to know how will this affect filing my tax if I directly transfer the business loan to personal loan to clear the debts

Thank you for your reply..

Let me be clear... you have used personal funds/loan facilities to finance business expenses and now that you have arranged business loan you wish to use these funds to repay money owed to you by the company.

Is my understanding correct?

Many thanks

Customer: replied 5 months ago.
you are right

Thank you for your reply..

You are welcome to transfer monies out of company funds into your personal account to repay Director's loan (funding of company operation out of own funds)

You won't have to report this on your personal tax return as this is not income.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 5 months ago.
But having said that
My business account bank statement wont show any money from my personal account is that an issue ?
Customer: replied 5 months ago.
Made a blunder paying the landlord which was sublet to office premise by cash
Customer: replied 5 months ago.
I took the personal loan and paid the landlord ( sublet landlord )
Customer: replied 5 months ago.
I needed that cushion since I paid him later almost after an year I moved

Thank you for your reply.

As you made a payment direct from your own funds, I presume you have accounted for the expenditure in company books as a creditor (money owed to you). If not, your accountant should make journal entries to reflect the payments in company accounts.

I hope this is helpful.

Customer: replied 5 months ago.
Thanks for clarification,
Customer: replied 5 months ago.
One more clarification
Customer: replied 5 months ago.
I have also withdrawn money from my business account to my personal account depended upon the needs
Will this become an Issue ?
Customer: replied 5 months ago.
I haven’t paid any contributions as such to hm revenue
Will that be ok if I disclose accordingly once I file my tax in May 2019

Thank you for your reply..

Provided you have made a profit, this could be treated as dividend.

On the other hand, if the company has not made a profit and you have taken money out of company, then your DLA would be overdrawn and this has tax implications...

I hope this is helpful and answers your question.

Customer: replied 5 months ago.
The money I transferred is not any fixed Amount it depends upon the income and also the need varied from 2k to 3k a month
Customer: replied 5 months ago.
Can I not show as directors salary instead of dividend?

Thank you for your reply. Look at my last posting.. You would have to address this withdrawal with the guidance of your account.

I hope this helps.

You would have to address this withdrawal with the guidance of your accountant.

Salary should be operated under PAYE.. if you have not registered your company as an employer then you need to do that and then draw a salary under PAYE.

Many thanks

Customer: replied 5 months ago.
I have registered only as a director and also not withdrawn as PAYE until now
So is that a problem??

There could well be an issue.. my advice is to talk with your accountant and find a best way to address it.

We appear to be going beyond the remit of original question.

I hope this is helpful and answers your question.

taxadvisor.uk and 2 other Tax Specialists are ready to help you
Customer: replied 5 months ago.
Thanks for clarification