Withdrawing Funds when a Company owes Money to the Director

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    Withdrawing Funds when a Company owes Money to the Director

    Hi All,
    If I personally lend my BTL Ltd company £250k and use that cash to purchase two houses (each with a company BTL mortgage). I then have £250k in the Directors loan account, where the company owes me personally £250k.

    After 12 months the two properties bring in say £30k in rent. Of this, £15k is reinvested into the company to overpay the mortgages.

    Can I withdraw the remaining £15k from the company directors loan account – to leave zero profit (to tax) in the company?

    OR is the remaining £15k deemed as profit, taxable at 19% (£2,850) to leave £12,150, before it can be paid out of the directors loan account?

    Will I receive £15,000 or £12,150 from the directors loan account.
    In a nutshell does the directors loan account pay out before or after corporation tax has been paid.

    Thanks in Advance

    #2
    You should check with your accountant, but the loan repayment should be an expense and the profit should be zero.

    However, there should be a formal loan agreement and the repayments and how they are made up should be recorded. Otherwise, the money might look like income to you, which you probably want to avoid if there's no interest being charged.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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