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Director's Loan agreement and Fund transfer

Only for UK Tier 1 (Entrepreneur) points system

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marcnath
Diamond Member
Posts: 2308
Joined: Tue Jul 03, 2012 2:27 pm
Location: Milton Keynes
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by marcnath » Tue Feb 13, 2018 7:18 am

tier1entrepreneur-A wrote:
Tue Feb 13, 2018 1:18 am
zimba88 wrote:
Tue Feb 13, 2018 1:04 am
They will not count towards your investment if you go via the director's loan option.
Thanks zimba88 for your reply, it's much appreciated,

I'm in the 200K route, and I intend to do my first investment on my company of £50K as a direcor's loan,

I thought that I could then re-transfer the £3K from my business bank account to my personal bank account, and I will upload all the receipts which will cover the £3k and all the details,

I see that you advice that this will not be possible the the £3k will not count for investment, and if I did like what I have mentioned above it will be counted as £47K instead of £50K,

Could you please confirm that my understanding above is correct?
Also could you please explain to me why? as I thought that as it all related to the business and within short period of opening the bank account/establish the company that could be acceptable,

Thanks in advance.
No, that should be ok.

As long as you have initially transferred 50K and then the business pays back 3K to you as expense reimbursement, it should be fine.
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

tier1entrepreneur-A
Newly Registered
Posts: 23
Joined: Mon Dec 25, 2017 2:08 pm
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by tier1entrepreneur-A » Tue Feb 13, 2018 1:25 pm

marcnath wrote:
Tue Feb 13, 2018 7:18 am
tier1entrepreneur-A wrote:
Tue Feb 13, 2018 1:18 am
zimba88 wrote:
Tue Feb 13, 2018 1:04 am
They will not count towards your investment if you go via the director's loan option.
Thanks zimba88 for your reply, it's much appreciated,

I'm in the 200K route, and I intend to do my first investment on my company of £50K as a direcor's loan,

I thought that I could then re-transfer the £3K from my business bank account to my personal bank account, and I will upload all the receipts which will cover the £3k and all the details,

I see that you advice that this will not be possible the the £3k will not count for investment, and if I did like what I have mentioned above it will be counted as £47K instead of £50K,

Could you please confirm that my understanding above is correct?
Also could you please explain to me why? as I thought that as it all related to the business and within short period of opening the bank account/establish the company that could be acceptable,

Thanks in advance.
No, that should be ok.

As long as you have initially transferred 50K and then the business pays back 3K to you as expense reimbursement, it should be fine.

Many thanks for your confirmation, it's much appreciated,

FYI, I have registered the company in mid Jan 18 after obtained tier 1 visa early Jan 18,

On my bookkeeping record, which date i should record the expenses date on (i.e. date of actual spent from my personal bank account, or date of register the company, or date I transfer the money back from my business bank account to my personal bank account),

Also, do I will transfer them as a total of 3k or I need to transfer it as it is (separate transaction or each expenditure)?

Thanks in advance,

Best Regards.

marcnath
Diamond Member
Posts: 2308
Joined: Tue Jul 03, 2012 2:27 pm
Location: Milton Keynes
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by marcnath » Tue Feb 13, 2018 2:46 pm

Discuss these with your accountant. It is not an immigration related matter.
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

tier1entrepreneur-A
Newly Registered
Posts: 23
Joined: Mon Dec 25, 2017 2:08 pm
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by tier1entrepreneur-A » Tue Feb 13, 2018 3:35 pm

marcnath wrote:
Tue Feb 13, 2018 2:46 pm
Discuss these with your accountant. It is not an immigration related matter.
Thanks marcnath,

I thought that this can be something related to Tier 1 visa extension requirements.

tier1entrepreneur-A
Newly Registered
Posts: 23
Joined: Mon Dec 25, 2017 2:08 pm
Great Britain

Director salary

Post by tier1entrepreneur-A » Sat Feb 17, 2018 1:12 am

Hi Team,

I have established my limited company, and I intend to take salary from my company as an employee performing consultation services, the money I will take will be from the business income and not from the money I have invested on the company in form of director's loan,
i.e. Year 1,
I have a consulting company and I will invest 100k on the company, and then I get sales of 80K, I get paid during the year (monthly basis) a total of 12K (1K per month),

So end of year 1:

Cash in = 100K +80K=180K.
Cash out = Other Employee salary (30K) + Director salary (12k) + company expenses (18K)=60K.
End of the year profit= 80k-60k=20k

Could you please confirm that the above should be acceptable, or I should not get any payment from my limited company as a director/employee?

Thanks in advance,

Best Regards.

marcnath
Diamond Member
Posts: 2308
Joined: Tue Jul 03, 2012 2:27 pm
Location: Milton Keynes
Great Britain

Re: Director salary

Post by marcnath » Sat Feb 17, 2018 9:11 am

tier1entrepreneur-A wrote:
Sat Feb 17, 2018 1:12 am
Hi Team,

I have established my limited company, and I intend to take salary from my company as an employee performing consultation services, the money I will take will be from the business income and not from the money I have invested on the company in form of director's loan,
i.e. Year 1,
I have a consulting company and I will invest 100k on the company, and then I get sales of 80K, I get paid during the year (monthly basis) a total of 12K (1K per month),

So end of year 1:

Cash in = 100K +80K=180K.
Cash out = Other Employee salary (30K) + Director salary (12k) + company expenses (18K)=60K.
End of the year profit= 80k-60k=20k

Could you please confirm that the above should be acceptable, or I should not get any payment from my limited company as a director/employee?

Thanks in advance,

Best Regards.
You should no problems until your withdrawals (salary/dividends) exceed 80K in this example.
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

tier1entrepreneur-A
Newly Registered
Posts: 23
Joined: Mon Dec 25, 2017 2:08 pm
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by tier1entrepreneur-A » Sat Feb 17, 2018 9:57 am

Many thanks for your reply, it's much appreciated,

In case the example become as below:

So end of year 1:

Cash in = 100K +50K=150K.
Cash out = Other Employee salary (30K) + Director salary (12k) + company expenses (18K)=60K.
End of the year profit= 50k-60k=-10k (loss),
Total money on the company bank account = 100k-10k = 90k,

Does the above will be acceptable?

Thanks in advance,

Best Regards.

marcnath
Diamond Member
Posts: 2308
Joined: Tue Jul 03, 2012 2:27 pm
Location: Milton Keynes
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by marcnath » Sat Feb 17, 2018 10:00 am

tier1entrepreneur-A wrote:
Sat Feb 17, 2018 9:57 am
Many thanks for your reply, it's much appreciated,

In case the example become as below:

So end of year 1:

Cash in = 100K +50K=150K.
Cash out = Other Employee salary (30K) + Director salary (12k) + company expenses (18K)=60K.
End of the year profit= 50k-60k=-10k (loss),
Total money on the company bank account = 100k-10k = 90k,

Does the above will be acceptable?

Thanks in advance,

Best Regards.
Sure - why do you think it wouldn't be ok ?
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

tier1entrepreneur-A
Newly Registered
Posts: 23
Joined: Mon Dec 25, 2017 2:08 pm
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by tier1entrepreneur-A » Sat Feb 17, 2018 11:07 am

Thanks for your confirmation,

I thought it could be an issue if the business doesn't make enough profit to cover all business expenses including my salary, in which case I will use part of the investment (director's loan, i. e. 100k as per the example above) to cover the business loss (i.e. 10k as per the example above),

So I thought they may be looking at that time if I get paid any salary or not from my business,

Do you see that nothing to worry about on the above case?

Thanks in advance.

marcnath
Diamond Member
Posts: 2308
Joined: Tue Jul 03, 2012 2:27 pm
Location: Milton Keynes
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by marcnath » Sat Feb 17, 2018 11:52 am

tier1entrepreneur-A wrote:
Sat Feb 17, 2018 11:07 am
Thanks for your confirmation,

I thought it could be an issue if the business doesn't make enough profit to cover all business expenses including my salary, in which case I will use part of the investment (director's loan, i. e. 100k as per the example above) to cover the business loss (i.e. 10k as per the example above),

So I thought they may be looking at that time if I get paid any salary or not from my business,

Do you see that nothing to worry about on the above case?

Thanks in advance.
Nothing to worry about
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

tier1entrepreneur-A
Newly Registered
Posts: 23
Joined: Mon Dec 25, 2017 2:08 pm
Great Britain

Re: Director's Loan agreement and Fund transfer

Post by tier1entrepreneur-A » Sat Feb 17, 2018 9:46 pm

Many thanks marcnath for your valuable advice, it's much appreciated,

Best Regards.

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