Directors Loan

clearaccounting100
clearaccounting100 Registered Posts: 49 Regular contributor ⭐
in General accounting discussion
If a director has a directors loan with his company, can he use part of that loan to buy a company vehicle? or does he have to physically pay for it? I think i am ok to use his loan, but would like clarification please. Also the company is VAT registered so would he have to charge VAT on the sale of the fixed asset? he would wouldn't he? I know these are simple questions, but suddenly got a confidence crisis!! :(

Comments

  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    He can charge the company vehicle to his directors loan account as long as it is done at a true market value. There would be no VAT presuming its a car, if its a van then yes VAT would have to be accounted for.
  • clearaccounting100
    clearaccounting100 Registered Posts: 49 Regular contributor ⭐
    Thank you. It is a van so i'll be accounting for VAT. Thanks very much :)
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Hmm, I wonder if gifting it would be an option? If he is a shareholder it may be considered a deemed distribution of profit and perhaps avoid VAT. Of course, then you may have an NI issue. If not a shareholder and he had use of the asset as a company van prior to the gift could that be a BIK rather than a sale?

    Havn't got the inclination to work through the examples myself but it may be worth a look.

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