Director’s Loan Account Examples: Worked DLA & s455 Scenarios
These director’s loan account examples show how common transactions such as personal withdrawals, dividends, expenses, cash introduced, repayments and loan write-offs can affect the director’s loan balance.
We also illustrate how an overdrawn DLA can interact with the 9-month rule, s455 Corporation Tax, CT600A, beneficial-loan rules and later repayment relief.
Director’s Loan Account Examples Start With One Question
The first step is to determine whether the director owes money to the company or the company owes money to the director.
A debit or overdrawn DLA generally means the director owes the company. A credit DLA generally means the company owes the director.
Every transaction should then be posted according to what actually happened rather than simply being treated as a generic director withdrawal.
Director Takes £10,000 From the Company
The director transfers company money to a personal bank account and the amount is not salary, dividend or expense reimbursement.
The director now owes the company £10,000. The balance should be reviewed for year-end reporting, s455 and beneficial-loan rules.
Director Pays £8,000 of Company Costs Personally
A director uses personal funds to pay genuine business expenditure and is not immediately reimbursed.
The company owes the director £8,000, assuming the costs are genuine company expenditure and correctly supported.
Director Introduces £25,000 Cash Into the Company
The money is a loan rather than share capital.
The £25,000 is financing, not sales income. The company records a liability to the director.
Read Director Lending Money to the Company →Company Repays a Credit Director’s Loan
The company already owes the director £30,000 and transfers £12,000 back.
The repayment reduces the company’s liability to the director. Genuine repayment of loan capital is different from salary, dividends or interest.
Overdrawn DLA Reduced by a Valid Dividend
The director owes £30,000 and the company has sufficient distributable profits to declare a valid £20,000 dividend to the shareholder.
The dividend can reduce the amount owed, but the shareholder still has dividend income for personal tax purposes.
Read Using Dividends to Clear a Director’s Loan →Director Repays the Loan in Cash
A £15,000 overdrawn DLA is repaid directly into the company bank account.
The debt is genuinely cleared, subject to checking whether any anti-avoidance matching rules apply if further borrowing occurs.
Read How to Clear an Overdrawn Director’s Loan →£20,000 Loan Remains Outstanding After the 9-Month Period
Assume a qualifying loan was made after 6 April 2026 and remains outstanding when s455 becomes payable.
The company can have an s455 liability of £7,150 on this simplified example. The charge is on the company and does not itself turn the £20,000 into taxable income of the director.
Read s455 Corporation Tax →Loan Outstanding at Year End but Repaid Within 9 Months
The company has a £25,000 DLA outstanding at its accounting date, but the director genuinely repays it four months later.
HMRC confirms that a loan outstanding at the accounting date can still require CT600A reporting even where it is subsequently repaid within nine months. :chatgpt-content-reference{index=”1″}
Read the Director’s Loan 9 Month Rule →Partial Repayment Before the s455 Deadline
A £30,000 year-end loan is reduced by a genuine £12,000 repayment.
On this simplified current-rate example, s455 exposure remains on £18,000 if that qualifying balance remains within the charge.
Director Repays £10,000 and Borrows £10,000 Again
A repayment is followed shortly afterwards by further borrowing.
HMRC’s bed-and-breakfasting rules can match the repayment with the later borrowing rather than treating it as permanently clearing the earlier loan.
Read Director’s Loan Bed and Breakfasting →Director’s Loan Exceeds £10,000
The maximum relevant loan balance reaches £20,000 and the director pays no interest.
A beneficial-loan benefit may arise where the relevant exemptions do not apply. The actual benefit depends on timing, balance changes, interest paid and the appropriate calculation method.
Read Director’s Loan Over £10,000 →Director Pays Interest on an Overdrawn DLA
Assume official-rate interest would be £1,125 but the director actually pays £600 of qualifying interest.
Paying some interest can reduce the beneficial-loan benefit but does not necessarily eliminate it.
Read Interest on a Director’s Loan →Company Pays Interest to the Director
The director has lent money to the company and is entitled to £1,000 gross interest.
The company normally considers CT61 reporting for qualifying interest paid to the director, while the director reports the gross interest personally.
Read Director Lending Money to the Company →s455 Paid and Loan Repaid in a Later Accounting Period
The company previously paid s455 and the director later permanently clears the loan.
Relief is available when qualifying loans are repaid, released or written off. Where the repayment occurs later than the original nine-month period, the relief itself can be deferred. :chatgpt-content-reference{index=”2″}
Read Reclaiming s455 Corporation Tax →Director’s Loan Is Written Off
A £25,000 overdrawn director’s loan is formally released by the company.
A write-off is not equivalent to repayment. Company relief can arise while the amount forgiven can create tax consequences for the borrower.
Read Director’s Loan Write Off →Overdrawn DLA in a Solvent Liquidation
The shareholder owes £100,000 to the company but is also entitled to a £150,000 liquidation distribution.
In suitable MVL circumstances, a shareholder’s distribution can potentially be set against the DLA rather than both sums being physically transferred.
Read Director’s Loan on Liquidation →Building a Director’s Loan Account Transaction by Transaction
The final DLA is usually the result of many transactions rather than one single withdrawal.
The £5,000 closing balance should then be assessed according to the company’s year end, repayment timing, director/shareholder status and other relevant DLA rules.
What Usually Increases or Reduces an Overdrawn DLA?
Checklist Before Finalising the Accounts
Detailed Guides Behind These Examples
Director’s Loan Accounts Cut Across Several Accounting Services
Accurate DLA treatment can depend on bookkeeping, payroll, management accounts, year-end accounts and Corporation Tax being reviewed together.
Director’s Loan Resources
Director’s Loan Account Examples FAQs
What is a simple director’s loan account example?
If a director withdraws £10,000 from the company and the payment is not salary, dividend, expense reimbursement or repayment of money already owed to the director, the DLA may become £10,000 overdrawn.
What happens when a director pays company expenses personally?
Genuine company expenditure paid personally can normally create or increase a credit balance owed by the company to the director.
Can a dividend reduce an overdrawn DLA?
A valid dividend can potentially be credited against the loan, provided sufficient distributable profits exist and the shareholder is entitled to the dividend.
What is the current s455 rate?
HMRC states that the s455 rate for loans made on or after 6 April 2026 is 35.75%.
Does repayment within nine months mean CT600A is not required?
Not necessarily. HMRC confirms that a loan still outstanding at the accounting date can require CT600A even where it is repaid within the following nine months.
Can a director’s loan move from credit to overdrawn?
Yes. If the company repays more than it owes the director, or the director later withdraws additional funds, the balance can move into an overdrawn position.
Can partial repayment reduce s455?
A qualifying partial repayment can reduce the amount remaining within the charge, subject to the detailed matching and anti-avoidance rules.
Is a director’s loan write-off the same as repayment?
No. A repayment satisfies the debt, while a write-off or release forgives the debt and can create separate personal tax consequences.
Does charging interest remove s455?
No. Beneficial-loan taxation and s455 Corporation Tax are separate regimes and should be reviewed independently.
We Can Reconstruct the Director’s Loan Transaction by Transaction
Tell us the company year end, current DLA balance and whether there have been withdrawals, dividends, expenses, repayments or historic s455 charges.
Tell Us About the DLA
We can review the balance and determine which transactions should increase or reduce the director’s loan.