Director’s Loan 9-Month Rule: Repayment Deadline & s455 Tax
The director’s loan 9 month rule is important where a close company has made a relevant loan to a director or shareholder and the balance remains outstanding after the company’s accounting period ends.
Learn how the repayment period works, how to calculate the deadline, what happens with partial repayments, when s455 Corporation Tax can become payable and why temporary repayments followed by further borrowing require particular care.
What Is the Director’s Loan 9 Month Rule?
Where section 455 applies to a loan or advance made by a close company, the tax is due on the day following the end of nine months from the end of the accounting period in which the relevant loan was made.
In practical terms, this creates a period after the company’s year end during which repayments can affect the amount of s455 Corporation Tax that ultimately becomes payable.
The calculation should be based on the actual loan transactions, repayments and dates rather than simply looking at the director’s loan account balance on the day the Corporation Tax return is prepared.
Year-End Balance, Repayment Deadline and Tax Payment Date
These are related concepts, but they are not exactly the same thing.
Accounting Period End
Establish the relevant director’s loan position at the company’s accounting period end.
Nine-Month Period
Review qualifying repayments, releases or write-offs occurring before nine months and one day after the period end.
s455 Payment Date
Section 455 tax is due on the day following the end of the statutory nine-month period where an amount remains chargeable.
How to Calculate the Director’s Loan 9-Month Deadline
The examples below illustrate the relationship between the company accounting period end, the nine-month point and the following day on which an applicable s455 liability becomes payable.
Year End: 31 March
Year End: 31 December
Year End: 31 January
These examples illustrate the statutory timing principle. Actual cases should be checked against the company’s Corporation Tax accounting period and the dates on which individual loans and repayments arose.
What If the Director Repays the Loan Within 9 Months?
Where an amount is genuinely repaid within the relevant period, the repayment can reduce the amount on which s455 ultimately becomes payable, subject to the detailed rules.
The fact that no s455 amount ultimately becomes payable does not necessarily mean that the loan disappears from the Corporation Tax return process.
HMRC states that if a loan is still outstanding at the accounting date but is repaid within nine months, a CT600A return is still required even though there may be no actual section 455 liability.
*Assuming the repayment qualifies and no anti-avoidance provision prevents relief.
What If Only Part of the Director’s Loan Is Repaid?
The director does not necessarily have to clear the entire balance for a repayment to matter.
A qualifying partial repayment can reduce the amount remaining within the section 455 charge.
The calculation therefore needs to identify the amount originally within the charge, the qualifying repayment and the amount that remains outstanding after applying the relevant rules.
What If the Director Misses the 9-Month Deadline?
If the relevant loan remains outstanding beyond the applicable period, section 455 Corporation Tax can become payable by the company.
Repaying the loan later does not normally mean the company permanently loses the section 455 amount.
Section 458 relief can generally be claimed after a qualifying repayment, release or write-off, although the timing of the relief means the company may have to wait before HMRC repays the tax.
HMRC’s current Company Taxation Manual states that the s455 rate for loans made on or after 6 April 2026 is 35.75%.
The Tax Rate Depends on When the Loan Was Made
The current section 455 rate is 35.75% for relevant loans made from 6 April 2026.
Loans made from 6 April 2022 to 5 April 2026 were subject to a 33.75% rate, while earlier periods can have different rates.
Historic director’s loan balances should therefore be reviewed according to when each relevant loan or advance was actually made.
Read our s455 Corporation Tax guide →Repayment Within 9 Months Does Not Necessarily Remove CT600A Reporting
This is an important distinction.
HMRC states that where a relevant loan remains outstanding at the accounting date but is repaid within the following nine months, CT600A is still required even though there is no actual s455 liability after taking the repayment into account.
The return therefore records both the relevant loan and qualifying post-year-end repayments or other relief where applicable.
HMRC has anti-avoidance rules aimed at loans being temporarily repaid and then substantially re-borrowed.
What If the Director Repays the Loan and Borrows Again?
HMRC’s mechanical 30-day rule can apply where repayments total £5,000 or more and new relevant loans of £5,000 or more are made within the statutory 30-day period.
In those circumstances the repayment can be matched against the new borrowing rather than being treated as clearing the earlier loan.
A separate arrangements rule can also apply in certain cases involving at least £15,000 outstanding and arrangements for further borrowing.
Temporary Repayment Example
Director’s Loan Deadline Checklist
How Can an Overdrawn Director’s Loan Be Reduced Before the Deadline?
Depending on the circumstances, a director’s loan may potentially be reduced through cash repayment, a valid dividend, properly processed remuneration or genuine company expenses previously paid personally by the director.
Each method has different accounting and tax consequences, so the objective should not simply be to post a journal entry that makes the balance disappear.
How to Clear an Overdrawn Director’s Loan →Related Director’s Loan Guides
Director’s Loans Connect With Your Wider Company Accounts
A director’s loan should normally be reviewed alongside bookkeeping, payroll, dividends, annual accounts and Corporation Tax.
Official Director’s Loan Resources
Director’s Loan 9-Month Rule FAQs
What is the director’s loan 9 month rule?
Section 455 tax is generally due on the day following the end of nine months from the end of the accounting period in which the relevant loan was made. Repayments before that point can affect the amount ultimately payable.
When does the 9-month period start?
The statutory timing is measured by reference to the end of the company’s Corporation Tax accounting period in which the relevant loan or advance was made.
What happens if I repay the entire loan within 9 months?
A qualifying repayment can remove the amount from the s455 charge, subject to anti-avoidance rules. CT600A reporting can still be required where the loan was outstanding at the accounting date.
What if I repay only part of the director’s loan?
A qualifying partial repayment can reduce the amount remaining within the section 455 charge.
What happens if I repay the loan after 9 months?
s455 may already have become payable, but the company can generally claim relief after a qualifying later repayment, release or write-off.
Do I still need CT600A if the loan is repaid within 9 months?
Yes, where the relevant loan was outstanding at the accounting date. HMRC states that CT600A is still required even where repayment within nine months means there is no actual s455 liability.
Can I repay the loan just before the deadline and borrow it again?
HMRC has anti-avoidance provisions dealing with repayments followed by new borrowing. The 30-day rule and arrangements rule may need to be considered.
What is the current s455 rate?
HMRC’s current manual states that the rate is 35.75% for relevant loans made on or after 6 April 2026. Historic loans can be subject to earlier rates.
Does paying s455 clear the director’s debt?
No. The s455 liability is a company tax charge. It does not itself repay or extinguish the underlying amount owed by the director.
Review the Director’s Loan Before s455 Becomes Payable
Tell us the company year end, loan balance and any repayments, dividends or further withdrawals made since the accounting period ended.
Tell Us About the Loan and Deadline
A few details will help us understand the accounting period, repayment history and potential s455 exposure.