Can someone with company tax knowledge answer these questions

Poshsalt

Soletrader

If I use £7k personal allowance of the £12k tax free, can I carry that £5k over to the next year?

Company

When you take out directors’ loan, how do you pay that back, with salary?

What the difference between capital gain loss under company or personal?

If you loan money from one company to another company, how is it taxed? When its repaid?

Do you pay tax on investments when invested or when that share is sold?

Can a company loan money to a non-company if so, what are the implication’s? (sum £3,000)

If I spend money on my car for repairs like £1,000 can I claim that as a expense or is it just 45p a mile?

Thanks for taking the time, I am looking at the moment for an accountant. Trying to get as much as I can do on my own to lower to costs.

Sandtree

1) No, tax free allowance cannot be carried forward

2) If you loan your company money then the company repays it as a loan repayment not as part of your salary... only if you charge the company interest is there a tax consideration

4) The interest is taxed... the loan itself isnt a business expense for the lender. When its repaid depends on the agreement between the companies

5) It depends, in many scenarios held assets are valued at fair market value and so gains are taxed when they are made rather than realised

6) Yes they can, implications in what sense?

7) Who owns the car? If its your car then its your responsibility to repair it... if its the company's car then its their responsibility (subject to any clauses in the agreement about damage the employee causes)

martindow

Regarding the car, as a sole trader, you can either use 45p per mile or use the actual costs, repairs, fuel, etc and apportion them according to the percentage of mileage that is business.  You can't claim both. 

This is possibly completely irrelevant for a limited company.

Poshsalt

martindow said:

Regarding the car, as a sole trader, you can either use 45p per mile or use the actual costs, repairs, fuel, etc and apportion them according to the percentage of mileage that is business.  You can't claim both. 

This is possibly completely irrelevant for a limited company.

Hi,

Let say soletrader, and i've spent £1,000 on repairs, do I total up how many miles i've used,

Example

Car Repair £1,000

50% personal - 50% trade.

So £500 is tax deductiable.

Poshsalt

Sandtree said:

1) No, tax free allowance cannot be carried forward

2) If you loan your company money then the company repays it as a loan repayment not as part of your salary... only if you charge the company interest is there a tax consideration

4) The interest is taxed... the loan itself isnt a business expense for the lender. When its repaid depends on the agreement between the companies

5) It depends, in many scenarios held assets are valued at fair market value and so gains are taxed when they are made rather than realised

6) Yes they can, implications in what sense?

7) Who owns the car? If its your car then its your responsibility to repair it... if its the company's car then its their responsibility (subject to any clauses in the agreement about damage the employee causes)

2) Lets say no interest, then when is the tax paid? or is there non until its repaid back to the original company.

6) I want to start another business sole trader, I want to loan from the company £3k to get it started, an should be able to pay that back within 9 months or sooner, so can I just send that money out or is it taxed?

Thanks for your help

Sandtree

2) What tax? No profit has been made to be taxed... you had £3k, you lent £3k to the company and so now had a £3k receivable whereas the company has £3k in the bank but £3k debt on the balance sheet. The £3k is given back without interest so the cash in the bank goes and the debt is extinguished from the balance sheet. 

6) It all gets very circular... as a company director you have to do whats best for the company and its shareholders so how can you justify lending the sole trader £3k -v- putting into a savings account or using it to buy more stock/advertising etc to grow your own business? 

With our own accountants they dont like loans going over the company year end and suggest charging a market rate of interest... the interest will be profit for the company so you'll ultimate pay takes on it but it'll in reality be less than a true market rate (assuming you are the sole shareholder)

How many times have you paid tax on a loan from your bank? Its the bank that pays the tax on the profit it makes from the interest. Companies are the same.

Savvy_Sue

I really think you'd benefit from talking to an accountant: you may not have had one until now, but if you are planning to run multiple businesses and lend money from one to the other, you are potentially opening multiple cans of worms. 

If you are a sole trader, then there's just you - the business(es) are not separate to you, so on one level it's simpler, but your accounting needs might benefit from separate tracking of the different income streams so you can quickly and easily see whether each separate area is profitable. 

And if you are starting a limited company, then really an accountant is a no brainer.