I look after a smallish limited company, where the director has bought a company car which is also available for private use. The car cost £8400, but the director contributed £2000 of her own money. I'm not sure what the correct accounting treatment should be for this contribution. The first part would be Dr Fixed Assets £2000, but not sure what account to credit. I can't credit the Director's Loan A/C, because it's a contribution not a loan to the company.
Hi Mark Dare I ask - why has she done this? Not sure what exactly its going to achieve. Has she taken advise of an Accountant re this and also the impact on her personal tax of her using a company car as opposed to claiming mileage for using a personal car?
-- Edited by Cheshire on Friday 4th of November 2016 08:57:02 AM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
She didn't ask anyone's advice before doing it.
However, as the private use of the car is calculated as a benefit in kind of just over £1k per annum, meaning a tax liability of just £200, it probably wasn't such a bad idea.
I rather think the £2k contributed might be credited to Employee Costs, as it effectively reduces the salary paid out to her by this amount.
