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  • FIRST POST
    • Maltesermom
    • By Maltesermom 17th Mar 17, 4:44 PM
    • 1Posts
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    Maltesermom
    Tax Credits and Director Loan Account
    • #1
    • 17th Mar 17, 4:44 PM
    Tax Credits and Director Loan Account 17th Mar 17 at 4:44 PM
    Hey guys, this may be slightly confusing and long winded, but hoping to get some advice.
    Before I started working for my partners Limited Company and before we were together, he hadn't paid himself every single month as the businesses bank balance wasn't great, so he has roughly £5000 owed to him in wages from the business. Now as his accountant did all of his paperwork, it was still logged that he was being paid the same amount each month, so therefore Paye and NI was still paid and the money has been sitting in the business as a loan from a Director. Hoping that all makes sense.
    In regards to Working Tax Credit/ Child Tax Credit, the money was never taken into account as it happened before we were together if that makes sense? If we were to do drawings on a monthly basis, so that in effect he would draw the £5000 over a 12 month period, would we class that as earnings for WTC? Or would it be irrelevant as it was accounted for years ago?
    Technically my first thought was we didn't need to include it, as it has been accounted for, but I suppose it hasn't where WTC is concerned. I am a bit confused lol
    I may have missed vital info, but hoping this makes vague sense. Thank you x
Page 1
    • fishybusiness
    • By fishybusiness 17th Mar 17, 7:54 PM
    • 1,074 Posts
    • 656 Thanks
    fishybusiness
    • #2
    • 17th Mar 17, 7:54 PM
    • #2
    • 17th Mar 17, 7:54 PM
    Surely he has already been paid the money. Wage slips and company accounts can demonstrate the route taken to Directors Loan account.

    It is his capital.

    The fact that it is sat in the company bank means he can take it back whenever he wants.
    • WillowCat
    • By WillowCat 17th Mar 17, 10:29 PM
    • 653 Posts
    • 734 Thanks
    WillowCat
    • #3
    • 17th Mar 17, 10:29 PM
    • #3
    • 17th Mar 17, 10:29 PM
    Yes, providing (as it seems) that the wages that the company paid him (though he didn't get the cash) were reported to HMRC for tax credits at the time, then it's just as if he got paid, then lent the money back to the company. As such it's his capital and he can withdraw it any time.

    Sorry, just seen that it was before your tax credits claim. Same is true - but did HMRC ask for his previous years earnings? Were the wages included? If so, you're still good.
    • Darksparkle
    • By Darksparkle 18th Mar 17, 7:01 AM
    • 4,080 Posts
    • 2,617 Thanks
    Darksparkle
    • #4
    • 18th Mar 17, 7:01 AM
    • #4
    • 18th Mar 17, 7:01 AM
    Tax credits follow the tax rules. Ask the accountant to confirm if the income is taxable when taken out the loan account.
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