Overdrawn dla & avoiding bik

bob22 Registered Posts: 9 New contributor 🐸

Is this the most tax efficient way?

Ltd Y/e 31 Jul 09
2 Directors
Overdrawn DLA £50,000!
Declare dividend £25,000 each.(profit OK)
Within 9 months of year end avoid 25% tax.
Needs to go on CT600a
BIK on p11d.
Company charges Directors 4.76% interest on loan to 5/4/10.(increase dividends in DLA to pay this)
Company would not need to pay the NI on the loan?
Company would declare this as interest income but there is loss to offset from previous year, so no CT.
Would this still need to go on CT600a? P11D?
Any thoughts if this is the best way?



  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Sounds like a plan. Although not sure DI losses b/fwd can be set against current DIII income.

    I would also have a closer look at how the DLA became overdrawn. If directors withdrew regular sums throughout the year, that they had always intended to be a distribution of profits, then there is no problem with drawing up the paperwork now to confirm that fact.This may avoid the overdrawn DLA altogether (or at least limit it). Please note that I am not suggesting you should re-write history.

  • bob22
    bob22 Registered Posts: 9 New contributor 🐸
    Thank you Dean.

    I was hoping it was you that would reply!

    The DLA was overdrawn due to cash being withdrawn from the bank account at random
    points and various amounts from a few hundred to a few thousand pounds. The company
    is heavily cash based (construction) with £50,000 in cash expenses (materials etc)but £100,000 withdrawn! Unfortunately its not still in his pocket for company use!
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