Directors & companiesAsk an accountant
Directors Loan
A director’s loan account can quickly become an expensive tax problem if it is not managed correctly.
Key points
- Money taken from the company that is not salary, dividends or a legitimate expense reimbursement may create an overdrawn director’s loan account. If the balance is not repaid within the required timeframe, the company could face a Section 455 tax charge.
- There may also be benefit-in-kind implications if a director receives an interest-free or low-interest loan, potentially creating additional tax and National Insurance liabilities.
- The solution is simple: monitor the director’s loan account regularly, keep accurate records and plan repayments before key deadlines.
- Good bookkeeping and early tax planning can help prevent unexpected tax bills and keep your business finances on track.
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