Re: Employee Expenses

On Nov 26, 9:56 am, Ronald Raygun <no.s...@xxxxxxxxxxxxxxxxxxxxx>
wrote:
PeterSaxton wrote:
On 26 Nov, 00:36, "desperad...@xxxxxxxxxxxxxx"
<heydude78...@xxxxxxxxxxx> wrote:
Hoping somebody can help.

While going through my end of year accounts (again) I have to account
for nearly £2,500 worth of expenses that an employee (me as an
employee and a director) owes to the business. Mainly due to me not
paying the fuel bill back to the business (I have a fuel card that the
business pays the bills on and I repay that bill and claim only
business mileage back). The debt was cleared in the next tax year.

My question is NOT how the hell did I get into this situation but more
how do I account for it. Should I claim it as a loan and if so, again
how do I account for that in my end of year accounts.Or should I do
something else? Would rather not claim it as a dividend if I can avoid
it.

You put the expenses in the P & L a/c under the categories such as
travel, subsistence, etc. and the total is a creditor in the balance
*** as a directors loan account.

Wrong.

You can get paid the balance on the directors loan account without
being taxed.

Yes, but this isn't a loan by the director, it's a loan to the director.

You've answered a question desp didn't ask, namely what should happen
with expenses the employee has incurred on behalf of the company, and is
wanting to be reimbursed. But you've allowed yourself to be misled by
desp's non-jargon-compliant use of the word "expenses", and didn't notice
that he was actually asking about costs the company has incurred on behalf
of the employee, and the employee now needs to reimburse to the company.
He bought private fuel on the company card and has forgotten to settle up
before year end.

The cost should therefore not go in the P&L at all, unless he treats it
as part of salary (which would result in income tax and NI complications).
It's a director's loan, but as a debtor, not a creditor, in other words
his director's loan account is overdrawn at year end. As it's only £2.5k,
it's not a serious matter, provided it's repaid soon.

I just add this to the normal Debtors section in the P&L then? There
are no tax implications?

The way it was 'repaid' in the next financial year was the putting in
the claim for mileage and other expenses which the company did not pay
back to me directly but instead used it to clear the 2.5k balance that
was there. The balance zeroed in just under 6 months into the
following tax year and at the year end just past, the business now
owes me £1.2k in expenses.

The reason these expenses are not being paid to and from the business
is a lack of money on my part and a lack of money on the business
part. I'm not going to go into the long details of it, but suffice to
say when the business and I moved here last year things changed
dramatically. That may not be relevant but I thought I'd answer what
everybody is no doubt thinking.

My intention is no that things are more under my control and I'm not
leaving the accounting to others is to get a grip on things like this
and deal with them 'properly'. Can you tell me what a 'normal' way of
dealing with these expenses would be?

My apologies again for my unclear use of jargon. I'm trying to rewrite
things to make it cleared but I may end up making things more
complicated!
.