2 min read
What it means
A director's loan account tracks money moving between you and the company that isn't salary, dividend or expense repayment. If you take out more than you put in, the account is overdrawn — in effect the company has lent you money. This is different from the company borrowing externally, and it has its own tax rules.
The tax to watch
An overdrawn director's loan not repaid within nine months of the year end can trigger a temporary corporation-tax charge (S455), and a large loan can create a benefit-in-kind. Keep the account accurately recorded and clear balances on time. This is why good records and a separate business account matter — mixing personal and company money creates avoidable tax problems.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Can I borrow from my own company?
Yes, but it must be recorded in the director's loan account and can trigger tax charges if overdrawn beyond set periods. Take advice before drawing significant sums, and clear the balance on time to avoid the S455 charge.
How is a director's loan different from a business loan?
A director's loan is between you and your company; a business loan is the company borrowing from an external lender. They have different tax treatment and purpose — external borrowing funds the business, a director's loan moves money between you and it.
Related reading
What is a director's loan account?
A director's loan account records money moving between you and the company that is not salary, dividend or…
Read →
How do I keep good financial records?
Keep business and personal money separate, record every transaction promptly, and retain records for at least…
Read →Is business loan interest tax-deductible, and what about the capital?
Interest on a business loan is generally an allowable expense against profit; the capital repayment is not…
Read →
Am I liable for company debts as a non-executive director?
A non-executive director has the same protection from company debts as any director — you are not personally…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.