Dla

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ybolg
ybolg Registered Posts: 9 New contributor 🐸
in General accounting discussion
Hi

I have just started doing a ltd co accounts and the director has taken out a personal loan of £10k plus interest.

She has deposited £10k into the business, and the business is paying of the monthly payments of capital and interest.

I am just unsure how I account for this in sage.

So far I have set up a DLA and credited with £10k
but how do i account for repayments of capital and interest.


Any help would be appreciated

Comments

  • mini_schnauzer
    mini_schnauzer Registered Posts: 347 Dedicated contributor 🦉
    Options
    DR DLA with monthly repayment capital amount
    DR Interest on loans with monthly interest amount
    CR Bank with full monthly repayment amount

    If using SAGE = DR DLA A/c 2300 and DR Int on Loans A/c 7903
  • coojee
    coojee Registered Posts: 794 Epic contributor 🐘
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    mini_schnauzer wrote: »
    DR DLA with monthly repayment capital amount
    DR Interest on loans with monthly interest amount
    CR Bank with full monthly repayment amount

    If using SAGE = DR DLA A/c 2300 and DR Int on Loans A/c 7903

    I don't know that you can DR Interest as it's not the business' loan, it's the director's. I guess you could put it there but then disallow it for tax?
  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
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    You can debit loan interest as it is the interest charged by the director for lending the company money. You then declare the interest received on the directors personal tax return and offset the interest charged to the director. Therefore, loan interest tax deductable to company and no tax charge to director.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    If the company is paying interest to the director then it should be deducting 20% at source and paying to HMRc on the appropriate form.

    The loan interest is a qualifying loan for the director and so this will net off against the loan interest received, meaning no tax charge.

    Technically the director would only be able to Claim back the tax deducted on interest on his tax return. I don't know if HMRC would allow the interest to be paid to the director gross in these circumstances.

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