Overdrawn Directors Loan account.

Ellabobbin

Good Afternoon,

Would someone be kind enough to confirm the following...

A client has an overdrawn director's loan account and so the correct actions would be:

Notify a loan to a participant on the CT600, then claim the relief if the loan is repaid within 9 months 1 day.

If the loan is over £5000 and interest free, it must go on the inidividuals tax return...

My main question is, if the loan is under £5000 should it still go on the CT600?

Opinions are divided in the office!!

Fingersan

Hi Ella

I believe that if a loan is under £5,000, it is still an overdrawn DLA and should have the necessary S455 tax claculated and disclosed on the CT600. I believe that the rule with the under £5,000 balance relates to the benefit in kind. If a loan is outstanding of less than £5,000 then the interest element on the loan that has not been charged, does not need to be reported on the P11D.

I think that is how it works, but it would be best waiting for other opinions!

Regards

Ellabobbin

That is my take on the rules also! But I'm just checking before I voice my opinion louder than I already have!

Thank you!

imeldabye

Just to confirm that this is correct, careful though to also include details of the DLA on the accounts for CH

stevo5678

That may be correct technically but I think there are many who don't do this with loans below £5k with the assumption that it is repaid within 9 months (possibly with a statement confirming this from the director).