A director’s loan account records money you take from your company that is not salary, dividends or a refund of expenses, and money you lend to it.
When the account is overdrawn
If you owe the company money at the year end and do not repay it within nine months and one day, the company pays a temporary tax charge under section 455 on the amount still outstanding. The company can reclaim it once the loan is repaid or written off, but the cash is tied up until then.
Interest and benefits in kind
If the loan goes above £10,000 at any point in the year and you pay little or no interest, it is usually a taxable benefit for you and the company owes Class 1A National Insurance on it.
How we help
- Keeping the loan account accurate through the year
- Planning salary and dividends to clear it before the deadline
- Reclaiming section 455 tax once the loan is repaid
