Hmrc p11d dispensation online dating
In term of reporting, if interest is charged, it is still necessary to report the loan on form P11D however there is no Class 1A for the employer.
If the director does not pay the interest you must prepare a P11D and he will need to report the benefit under Self Assessment and this will probably be adjusted for via a PAYE coding which will need checking.
Sometimes by error or design illegal borrowing (illegal because it is not shareholder approved) takes place.
In any event borrowing creates a loan, and if the loan is not repaid there will be tax consequences.
Planning points: rather than review a loan account at the year end and then vote salary or dividends to repay it, it may be sensible to vote both at the start of the year.
This way a director has funds available to draw on without the added complication of having to review for RTI reporting.
This should be in credit and it will have been created by bookkeeping when the company owes the director for something such as expenses that the director has incurred on the company's business, and has not been reimbursed.
It is sensible to work out whether it is cheaper for the director to pay tax on the beneficial loan and the employer to pay the Class 1A NICs on the benefit or for the director to pay interest on the loan.
Where the director is a higher rate taxpayer there may not be a difference.
HMRC instructs its staff to examine directors' private expenditure during the course of an enquiry into a close company's books and records.
In most cases the company will be expected to produce a transaction history of any director's loan or current account.
Conversely, the company can also vote a bonus and treat the write off as earnings.