Guide
Director's loans explained
A director's loan account records money moving between you and the company that is not salary or a dividend. If it's still overdrawn 9 months and 1 day after the year end, the company pays a section 455 charge (35.75% for loans made from 6 April 2026, 33.75% before). HMRC refunds it after the loan is repaid.
Step by step
- 1Record each payment in or out of the loan account
- 2Keep company money separate from your own
- 3Check the balance at the year end
- 4Repay an overdrawn loan within 9 months and 1 day of the year end if you want to avoid the section 455 charge
Common mistakes
- Treating company money as your own
- Forgetting the year-end balance
- Ignoring the section 455 charge on an overdrawn loan
Related guides
Last checked against GOV.UK: 28 October 2026. Tax year 2026/27.
Not affiliated with HMRC. General information, not professional tax advice. Check GOV.UK or speak to a qualified adviser for your situation.