I have a personal tax bill due by 31st January 2017. How is it best to pay this?

I have a personal tax bill due by 31st January 2017. How is it best to pay this?

As this is a personal tax liability (and not a company liability), ideally it should be paid from personal funds.

If the company has sufficient reserves it is possible to declare an additional dividend in January in order to pay the tax bill, however this dividend would be treated as personal income and would therefore increase any personal tax liability for the current tax year to 5 April 2017.

Alternatively if the company owes you money (i.e. there is a credit balance on your director’s loan account) you could use this balance to pay the tax bill.

As a last resort you could pay a bonus or borrow money from the company, however there are further tax implications to these options.

Please give us at Ellis & Co a call if you would like to discuss any of the above.