Director's Loan Accounts

Question 2

What’s an associate for DLA?

Answer 2

A relative or business partners.

Question 3

What is a relative for DLA?
What is not?

Answer 3

Direct descendants, including half brothers etc. Spouses and common-law spouses.

Not:
step family
divorced partners

Question 4

S455 - what is it and who does it apply to?

Answer 4

Does not apply to limited companies - only individuals

Question 5

S455 excluded loans: 3 conditions to be met

Answer 5

1) All outstanding loans to the same participator, must not exceed £15,000, and
2) Borrower works full-time for the company,
3) Not have a **‘material interest’ **in the company (can’t have >5% share capital)

Question 6

A company owes a shareholder money. How may this be repaid?

Answer 6

Dividends
Bonus
Salary
Reimbursement

Question 7

What a dividends?
What’s a Renumeration?
What’s the difference for tax?

Answer 7

Dividend - paid from distributable profits after shareholder meeting (after corporation tax) (post Corporation Tax). Dividend allowance @ £500 (was £1,000).

Renumerations - (pre corporation-tax - chargeable under ITSA) - deductable expense. CT is subject to NICS

There’s also “benefit conferred”. This is any extraction of value out of a close company which is not otherwise subjected to income tax, or, is taxed at a lower rate than if it was taken as remuneration or a distribution.

Question 8

What if only part of a S455 loan is repaid?

Answer 8

Relief is available but proportionate to amounts repaid/written off.