Many business owners withdraw funds from their companies beyond salary and dividends at some point. It could cover a short-term personal cost, help with a property deposit, or bridge the gap between dividend declarations.
That flexibility can be useful, but director’s loan accounts come with tax rules that are easy to underestimate. If the balance is not managed properly, the company may face a section 455 tax charge, the director may have a taxable benefit, and HMRC may challenge repayments that appear to be short-term fixes.
The rules matter even more in 2026/27 because the section 455 rate has increased for new loans made from 6 April 2026.
This guide explains how director’s loan accounts work, when tax charges arise, and what practical steps can help keep the position under control.