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

The "bed and breakfasting" rules in section 464ZA of the Corporation Tax Act 2010 stop directors gaming the 9-month deadline by repaying the loan just before it bites, then re-borrowing a similar sum soon after. (s 464ZA replaced the old sections 464C and 464D, which were repealed with effect from 30 October 2024 — most write-ups still cite the repealed pair.) Two tests can catch this.

The 30-day rule: where £5,000 or more is repaid and £5,000 or more of new chargeable payments is made to the director or an associate within 30 days, the repayment is treated as repaying the new borrowing rather than the old balance — so the old balance is still outstanding for S455.

The arrangements rule: this one has no 30-day window, but it is not "any amount, any time" either. It bites only where the total owed immediately before the repayment was £15,000 or more, arrangements had already been made for replacement payments, and those replacement payments total £5,000 or more. Note it turns on arrangements having been made, which is a narrower test than a loose intention to re-borrow.

Where either applies, the "repayment" is disregarded for S455 purposes and the charge still bites. These thresholds are £5,000 and £15,000 — not the £10,000 beneficial-loan threshold below, which is a different rule about a different tax.

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.