Has your accountant ever told you not to pay personal expenses through your company account?
Bet he or she has. And I've bet you've thought "FFS, what does it matter?" Well, here's why it matters:
1) Firstly, it's a ballache: somebody - maybe you, normally your accountant, but definitely somebody - has to trawl through all your transactions, identify those that are non-business, record these on your P11D and submit that to HMRC.
But we're the good guys and doing things that are a ballache is our meat and potatoes, so no problem there.
2) Secondly, it will affect YOUR PERSONAL FINANCES:
You need to pay tax on the benefit-in-kind - the BIK being the amount of non-business expenses the company has paid on your behalf. If you're a higher rate tax payer, you'll pay 40% tax on this. Remember also, maybe your tax planning has been set so that your salary and dividend take you right up to the basic rate ceiling and the BIK charge could propel you beyond that.
Note also it could affect any child benefit claim if your income (incl BIK) is between £50k and £60k.
If you earn £100k+ the BIK will affect the personal allowance taper.
3) Finally, it will affect the COMPANY'S FINANCES:
BIKs are subject to class 1a NICs. So the company will pay 13.8% NIC on the amount paid to you. This will affect the profitability of the company, which will affect the amount you can withdraw in dividend.
So, all in all, it's good idea to listen to us (or them).
