Singing Pig

hi there,

i made a sizeable loan, interest free, to a limited company (of which i am sole director) in 2006 and now i want to start taking it back.

rather than pull a big lump out (approx 75k) and hurt the cash position i'd rather draw funds monthly but my worry is our friends in the IR will view this as income even though i've paid the tax on it once!

the money is all accounted for, is in the accounts as a directors loan etc etc so its all above board.

any thoughts? is it straightfoward and i'm worrying about something that i shouldnt?

regards

leighton

Leighton,

When you introduced money into the company this goes into the 'directors loan' account and can be taken back out at anytime.

It is not accounted as earned income.

Spk to your accountants to check the situation - I think what I have said above is correct.

thanks david,

much appreciated!

regards

leighton

Leighton,

You are right to be a little cautious of paying yourself anything that LOOKS like a salary out of your company. As i often say to clients, its very hard indeed to answer the question from the inspector - "So this £2,000 per month that comes out of the account on the 1st of every month, which you use very much like a salary to pay your regular outgoings, prove to me that ISNT a salary". If it walks like a duck.... So yes you need to be careful. Apart from correctly writing up your books you can protect yourself in several ways, such as taking it out so it DOESNT look like a salary. Ie make it lumpy and irregular!

As ever with a limited company do as David suggests and speak to your regular accountant about taking out money from your account - they should hopefully much prefer you ask the question mid year with a quick email than have to undo problems after the event.

Regards,