How to treat limited company director's cash withdrawal for personal use?

UK Discussion in 'General Tax Discussion' started by Renata87, Jan 9, 2019.

  1. Renata87

    Renata87

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    Hey there!


    I am trying to understand the following.


    If a director of a private limited company takes out cash from the company's business bank account on an irregular basis to pay for his private expenses such as renting his property or buying food...etc. and there are no receipts available for the expenses how should this be treated in the company's accounting records? Also does this need to be included in the director's self assessment tax return and if yes, which box should this be entered into?


    Thanks for any help!


    Renata
     
    Renata87, Jan 9, 2019
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  2. Renata87

    Becky Administrator

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    Does the director intend to repay the money?
     
    Becky, Jan 9, 2019
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  3. Renata87

    Renata87

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    Hi Becky,

    Thanks for your quick reply.

    The only other source of income the director has is £700 salary paid by the private limited company on a monthly basis, so I don't think the director is able to repay the cash taken out.

    He is in the need of taking out the extra cash out from the business for his personal expenses due to the low salary which he was recommended to set at that level to avoid NI & tax obligations by a previous bookkeeper.

    I thought that it could be on a director's loan account but because he will not be able to repay the cash I am not sure how should this be treated both from the director's and the business prospective.

    Thanks in advance.

    Renata
     
    Renata87, Jan 9, 2019
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  4. Renata87

    Becky Administrator

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    If it's not a loan then it's a taxable benefit in kind unfortunately.
     
    Becky, Jan 10, 2019
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