Overdrawn Directors Loan account.
Ellabobbin
Registered Posts: 92 Epic contributor 🐘
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!!
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!!
0
Comments
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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!
Regards0 -
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!0 -
Just to confirm that this is correct, careful though to also include details of the DLA on the accounts for CH0
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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).0
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