A director's loan is money moving between a director and their company that isn't salary, dividend or expense repayment. This guide explains the tax traps to watch.
Published July 2026 · Updated July 2026
Because a limited company is legally separate from its owners, money the director takes out that isn't salary, a dividend or a legitimate expense reimbursement is a loan from the company. The running balance is the director's loan account.
If you owe the company money at the year end, there can be tax consequences, a Corporation Tax charge (often called s455) on the outstanding balance, and a possible benefit-in-kind charge if the loan is large and interest-free. Keeping the account clearly recorded avoids nasty surprises.
Yes, but it must be recorded, and if not repaid within a set period after year end it can trigger a Corporation Tax charge. Take advice before relying on it.
That's fine and common in start-ups; the company owes you, and can repay you without tax (interest paid to you may be taxable income).
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.