S455 Director's Loan Account Tax Calculator
If a director's loan account (DLA) is overdrawn at the company year-end and not repaid within 9 months, HMRC charges the company 33.75% Corporation Tax under s455 CTA 2010. This is repayable when the loan is repaid — but ties up cash.
Frequently Asked Questions
What is an overdrawn director's loan account?
A director's loan account (DLA) records money borrowed from or lent to the company. It becomes overdrawn when the director has withdrawn more than they've put in or are owed (e.g., via salary, dividends, expense reimbursements).
What is the s455 charge rate in 2026?
The s455 Corporation Tax charge rate is 33.75% of the outstanding DLA balance — matching the upper dividend tax rate. This was increased from 32.5% in April 2022 to align with dividend tax rates.
When is s455 tax due?
The s455 tax must be paid to HMRC 9 months and 1 day after the company's accounting period end — the same deadline as the corporation tax payment. It's added to the CT600 return.
Is s455 tax refundable?
Yes. S455 is a temporary tax — HMRC repays it 9 months after the end of the accounting period in which the loan is repaid or written off. However, writing off the loan triggers income tax on the director.
What is the 30-day rule for DLA repayments?
To prevent directors repaying the DLA immediately before year-end and re-borrowing shortly after (bed and breakfasting), HMRC applies anti-avoidance rules. Repayments followed by re-borrowing within 30 days of the same amount are ignored.
What is a beneficial loan for P11D purposes?
If the DLA is overdrawn by more than £10,000 at any point during the tax year, the company must report a benefit in kind on the director's P11D, calculated at HMRC's official interest rate (2.25% for 2025/26 on the average outstanding balance).
Can the company write off the DLA instead of s455?
Yes, but writing off the loan creates taxable income for the director — taxed as employment income (subject to income tax and NIC). It also creates an employer NIC liability for the company. It is rarely better than repaying the loan.
What happens if s455 is not paid on time?
Late payment incurs HMRC's standard CT late payment interest. There's no separate s455 penalty, but late CT filing/payment penalties apply as normal. HMRC also has powers to assess s455 even after the normal CT enquiry window if undisclosed.
How can a director clear an overdrawn DLA?
Options include: declaring a dividend (most common), paying a salary or bonus, repaying cash from personal funds, or converting the DLA to a formal loan with proper interest and documentation.
What records must the company keep for DLA?
The company should maintain a DLA ledger showing all transactions. Directors' loans must be disclosed in the company's abbreviated accounts. Loans to directors of >£10,000 require shareholder approval under Companies Act 2006 s197.
What is the DLA close company surcharge?
Close companies (broadly, companies controlled by 5 or fewer participators) are subject to s455 specifically. The s455 charge does not apply to ordinary employees' loans — only to participators (shareholders/directors).
Is interest on a director's loan deductible?
If the director charges the company interest on a credit DLA (money the director has lent to the company), that interest is taxable income for the director. It must be reported to HMRC and accounted for correctly in CT.