Expenses paid by a director on behalf of the company

Bought stock or paid company costs on your personal card?

If you pay for your company’s stock or costs with your own card, they are still the company’s purchases. They go in the company’s accounts as its costs, or as its stock if the goods are unsold at the year end. Until the company pays you back, it owes you the money. Paying you back is not salary or a dividend, so there’s no tax on it for you¹.

By Fileyear teamLast checked 1 November 20262 min read

Why it’s still the company’s cost

The company is the business. If the goods were bought for it to sell, or the cost was wholly for its trade, it is the company’s cost, whoever’s card paid². A director who buys £600 of stock on a personal card in March has, in effect, lent the company £600 to buy it.

Personal spending is different. If the purchase was partly for you, only the business part is the company’s, and the rest is yours.

How it goes in the accounts

Two things are recorded:

The purchase. £600 of stock bought. If those goods are still unsold at the year end, they are part of closing stock at what they cost⁴. See how to value stock.
What the company owes you. £600, until it pays you back.

When the company transfers you £600, that repayment clears the amount owed. It isn’t a new cost, and it isn’t income for you¹.

Check your company’s dates and set a reminder

Search the Companies House register. Your company page shows its filing dates, what to file next and a reminder you can set.

If you also owe the company money

Many directors’ loan accounts go both ways in a year: you take money out, and you pay for things on the company’s behalf. Both go through the same account. Money you spent for the company reduces what you owe it. That matters because the company pays s455 tax on a director’s loan still owed 9 months after the year end⁵. See director’s loan accounts and s455.

Keep the evidence

The company must keep records of all money it spends and all goods it buys³. For a purchase on your own card, keep the receipt or invoice, the card statement line, and a note of what it was for. Where you can, have the supplier put the company’s name on the invoice.

How Fileyear does it

Fileyear prepares your company’s accounts from its bank statement, so it sees a personal purchase when the company pays you back. File each repayment under what it paid for, such as stock, postage or software, not as the director’s loan. If the company hadn’t paid you back by the year end, include it in “Bills for this year paid after the year end”, and count any unsold goods in your stock answer. If you also owe the company on your director’s loan, file the payments to you by what they really were, so only what you took for yourself is on your loan.

See Fileyear for online sellers for the supported stock, payout and bookkeeping inputs.