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Tax and NI on director's loan
Will FA work out the tax & NI due on a loan to a director if it is classified as a 'Payment from Director Loan Account'?
Also, when it is repaid, how do I enter it?
Also, when it is repaid, how do I enter it?
I’m unsure
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Inappropriate?@RichAllum,
In very simple terms you only have to pay tax on money taken out if it makes your director's loan account overdrawn at the company year end. (HMRC may try & argue it IS liable to NI but that can be sorted out fairly easily).
Provided the loan is repaid within 9 months of the Y/E there is no tax to pay. Don't forget, however, the director may have a liability on the notional interest.
I’m confident
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Inappropriate?To answer your second question..on HOW to make the loan repayment in FAC.
Do your payment to the company, and when entering/editing the explanation in FAC, select :
Type = Money Received from User
Reason = Payment to Director Loan Account
