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The director's loan account (DLA) with transaction detail is an account template which can be applied to the amounts due from directors' accounts (nominal accounts 140301-140309 and 150301-150309) and to the amounts owed to directors' accounts (nominal accounts 240301-240309 and 250301-250309). This article explains what the template does and how to complete it.
Table of contents
What does it do?
As the name suggests, this template allows you to analyse the director's loan account on a transactional level. It also goes a step further by charging interest on the overdrawn amount when the running balance for the year exceeds the £10,000 threshold.
Where the account is in credit rather than overdrawn, you can also choose to charge interest. Use the Is interest charged on the account if the balance is in credit (CT61 required)? toggle and select either the Interest free allowance or the Daily Average method.
How do I complete it?
The easiest way to complete the template is by importing reconciliation data from the ledger details (think View ledger) in Silverfin. This is not possible for a Xero TB sync, or for other syncs that do not support ledger detail. In that case, you can import the ledger details from Excel, or enter them manually if required.
Select the From ledger option and map the Source field headers to the dropdown options provided, excluding the interest rate field.
This then populates the body of the template. As a reminder, you can also complete the body manually instead of using the Import reconciliation data option if you prefer.
The interest rate is set by default to the official rate of interest per HMRC, published in Beneficial loan arrangements: HMRC official rates. This can be overwritten manually if required.
As you complete the template, contextual guidance is shown automatically:
- A note that charging interest is not mandatory where the balance stays below £10,000. Set the rate to 0% if you do not want to charge it.
- A warning if the rate used on an overdrawn balance is below HMRC's official rate.
- Guidance on the tax implications of charging interest on a credit balance.
Interest is automatically applied when the running balance for the year exceeds £10,000.
At the bottom of the input section, you will then get a breakdown of the:
- Pre-interest balance: the before adjustments value plus the value of any adjustments.
- Total interest: per the Interest column in the workings.
- Balance as at the end of the period: the balance per the workings.
Use the Reconciled to dropdown to choose whether the template reconciles on a pre-interest or post-interest basis. Post-interest is the default. Where a difference remains, the Post adjustment button lets you post it directly to the relevant interest income or expense account.