Director Loan Account

Hi - I have a Director Loan balance of approx £115,000 owed me, by the Limited company (as a 10% shareholding Director). Coming to our year end Dec 18, after a terrible Jan/Feb, we have now started clawing back losses, and 2019 is looking promising already. However, the balance sheet is very week now. I take a monthly draw down of £1500 from my DL account, and don't charge interest. I know that one option to strengthen bottom line and the balance sheet would be to capitalise a % of my DL balance for share capital. However, with the current shareholding balance, and the fact I am very much taking a day to day back seat these days, I am willing to look at other alternatives to support the business, so wondered the following:

Could a chunk of my DL balance be capitalised, or reinvested in the business, whereby I forgo share capital in exchange for perhaps other income sources, e.g. a notional salary for a foxed period - granted, I would be subject to the normal tax/NI through PAYE, but I am comfortable with that. I also have an independent SIPP with other shareholders, within which sites the business property, so perhaps a company monthly contribution to support and grow the potential of my pension (and investment opportunities as part of the SIPP moving forward)?

Any technical advice appreciated - I just have no interest in increasing share capital in exchange for supporting the business.
Thanks in advance.


  • CSan89
    CSan89 MAAT Posts: 207
    Sounds like you need advice from an accountant/ tax specialist. Might be worth looking for paid advice rather than anonymous advice off of a forum.

    Sounds like some complex tax planning would be involved.
    AAT Level 2&3 - 2016
    AAT Level 4 - 2017
    Personal Tax, Business Tax and External Auditing

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    Certificate Level - Jan 2019
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