Overdrawn directors loan account

zephyrzephyr Settling In NicelyRegistered Posts: 17
I know this has been discussed many times on the forum, and I have read all the replies ( I hope) but could some one please clarify for me:

If the DLA is overdrawn for more than one accounting year is the S442 tax calculated on the whole amount outstanding again?

ie Overdrawn £30,000 ye 30.9.15 - not repaid- so S442 tax paid @ 25% £7500

Additional loan taken out 30.12.15, £30,000, At ye 30.9.16 - now overdrawn £60,000, is the tax calculated on £60,000 or just the additional £30000.?

I am pretty sure I was advised by HMRC that is was just on the additional loan but on reading all the guidance it states on the amount outstanding and no mention of any tax already paid.

Thank you in advance

Best Answer

Answers

  • hal978hal978 LondonRegistered Posts: 58
    There's a benefit-in-kind on the director if the balance is over £10,000 at any time during the year and interest is paid (or unpaid) at less than the official rate.

    There's also anti-avoidance provisions in S464 that might be relevant.
    AQ2013 Level 4:
    Financial Statements - Competent (92%) - June 2017
    Budgeting - Competent (78%) - July 2017
    Financial Performance - Competent (88%) - September 2017
    Personal Tax - Competent (93%) - November 2017

    AQ2016 Professional Diploma:
    External Auditing - Competent (86%) - December 2017
  • zephyrzephyr Settling In Nicely Registered Posts: 17
    Thank you for replying and confirm that the tax is on the additional loan ,which does makes sense!

    I had realised it was S455 after I had typed it.

    The loan was taken out before 6.4.16, which I had read was taxed at 25% and only at 32.5% if after 6.4.16.

    P11ds have been submitted for the benefit in kind.

    It is so good to get a quick second of opinion when you are sat on your own and suddenly have a panic moment!
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 762
    hal978 said:

    There's a benefit-in-kind on the director if the balance is over £10,000 at any time during the year and interest is paid (or unpaid) at less than the official rate.

    There's also anti-avoidance provisions in S464 that might be relevant.

    Are you going to do ACCA after AAT?

  • hal978hal978 LondonRegistered Posts: 58
    No, I won't be doing ACCA.
    AQ2013 Level 4:
    Financial Statements - Competent (92%) - June 2017
    Budgeting - Competent (78%) - July 2017
    Financial Performance - Competent (88%) - September 2017
    Personal Tax - Competent (93%) - November 2017

    AQ2016 Professional Diploma:
    External Auditing - Competent (86%) - December 2017
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 762
    CIMA? ATT? ACA? Enjoying Life?

    Your exam scores are really high.
  • hal978hal978 LondonRegistered Posts: 58
    Thank you for the compliment!
    I haven't decided about ACA yet. There are so many exams and I only get a few exemptions as I started on Level 4 instead of Level 3. My employer is also not ACA qualified so I have to change jobs.
    AQ2013 Level 4:
    Financial Statements - Competent (92%) - June 2017
    Budgeting - Competent (78%) - July 2017
    Financial Performance - Competent (88%) - September 2017
    Personal Tax - Competent (93%) - November 2017

    AQ2016 Professional Diploma:
    External Auditing - Competent (86%) - December 2017
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 762
    hal978 said:

    Thank you for the compliment!
    I haven't decided about ACA yet. There are so many exams and I only get a few exemptions as I started on Level 4 instead of Level 3. My employer is also not ACA qualified so I have to change jobs.

    If you like tax ATT and CTA is a good route.

    Otherwise you could do ACCA/ACA. It is probably easier to do ACCA. I believe once you are a member of ACCA for 5 years you can apply for ACA membership without having to do any of the ACA exams.
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