Re-imbursing directors on Sage

Jo Legg

Good Evening All

I have a client who has formed a Ltd Co (July 2011) but did not open business account until Nov 2011. Business expenses incurred before Nov 2011 were paid out of personal account. I have therefore two bank accounts set up on Sage and the personal account is showing as £6k approx o/d as it just has business expenses and no income. She is paying herself £550 per mth (enough to avoid PAYE and NI) but wants to pay herself more. As she is owed money by the company, can this be repaid per month by simply doing a tf on Sage from Business A/C to personal A/C? This way she doesnt pay PAYE or NI or have the payments as dividends (which the Company will pay Corp Tax on- as part of profit).Is this allowed and if so do I need to tf the c/a debt to a directors loan first?. I'm sure this is legal but I want to make sure first. (I also have a dispensation in case if that helps!)

Thanks

Monsoon

Hi,

The bank account that's personal in Sage is a DLA. It's not a company asset (liability), but is actually a directors loan account set up as a bank.

It's probably simplest to have the bank as the DLA, and any transactions between the company and director go through there, so yes, you can just do a bank transfer.

If the Ltd Co is her only income, then for tax efficiency I'd pay her the £589 per month basic salary (Dr Directors Salary Cr DLA Bank) and then she can pay what she pays as a bank transfer. The DLA bank will just show the running balance of her asset/liability with the company.

Jo Legg

Thank you so much, just to confirm-she can go up to £589 without any tax or NI? That may even increase after April budget?

Thanks again

Monsoon

Jo Legg wrote: »

Thank you so much, just to confirm-she can go up to £589 without any tax or NI? That may even increase after April budget?

Thanks again

Yes and yes.
2012-13 it's £632.66 per month.