I have just realised that I should have deducted income tax at 20% from the interest I have paid myself on loans I have made to my Limited Company.
I posted the original interest amounts using General Transactions, crediting the Directors Loan Account and debiting Loan Interest Paid.
I have now calculated the Income Tax and wanted to check that I have posted this correctly. Again I used General Transactions and credited the Income Tax & NI Liability account and debited the Director's Loan account (as I have to pay this money back to the company).
When it comes to paying HMRC, I assume I do a payment from my bank account, debiting Income Tax & NI Liability so that this returns to zero.
Is that right?
Hello M M,
Yes, that sounds correct to me. However I'm not an expert on tax on directors loan - please check this treatment with your accounts.
Regards