Director's Loan Account (S455) Calculator

Section 455 of the Corporation Tax Act 2010 charges a company Corporation Tax on loans made to a "participator" — usually a director-shareholder of a close company — where the loan remains outstanding 9 months and 1 day after the end of the accounting period in which it was made. The rate tracks the dividend upper (higher) rate: 35.75% for 2026-27, up from 33.75% in 2025-26 following the Autumn Budget 2025 dividend rate rise.

S455 exists to stop directors extracting value from their company as an informal, tax-free loan instead of salary or dividends. Because most owner-managed companies are "close companies" (controlled by five or fewer participators, or by any number of director-participators), the rule catches the vast majority of small Ltd companies.

The 9-month-and-1-day rule

The clock starts at the end of the accounting period in which the loan was drawn — not the date of the loan itself. If a director borrows £20,000 partway through a 31 March year-end company's accounting period, the company has until 1 January the following year to have the balance cleared (via repayment, dividend, bonus, or write-off) before S455 applies to whatever remains outstanding.

Refundable, not a permanent tax

Unlike ordinary Corporation Tax, S455 is designed to be temporary. Once the loan is genuinely repaid, the company reclaims the S455 tax paid on that portion via a S458 claim, submitted with (or after) the Corporation Tax return for the period in which repayment happened. The refund is due 9 months after the end of that later accounting period — so there can be a real cash-flow gap between paying S455 and getting it back, even though the loan itself was fully repaid.

Bed-and-breakfasting anti-avoidance

HMRC's "bed and breakfasting" rules stop directors gaming the 9-month deadline by repaying the loan just before it bites, then re-borrowing a similar sum soon after. Two tests can catch this: the £10,000 rule (if £10,000+ is repaid and re-borrowed within 30 days) and the intentions rule (if there was an intention to re-borrow at the time of the original repayment, regardless of amount or timing). Where either applies, the "repayment" is disregarded for S455 purposes and the charge still bites.

The £10,000 threshold: if a director's total loans from the company exceed £10,000 at any point in the tax year and the loan is interest-free or charged below HMRC's official rate of interest (3.75% for 2026-27), the difference between notional interest at the official rate and any interest actually paid is a taxable benefit-in-kind, reported on a P11D.

Employer Class 1A NIC: the company pays Class 1A NIC at 15% on the BIK value, alongside the director's personal income tax at their marginal rate.

S455 and the BIK are separate charges: an overdrawn loan can trigger both — S455 on the company for the unrepaid balance, and a beneficial-loan BIK on the director for the "free" use of the company's money — at the same time, on the same loan.