Is your director's loan about to cost you tax?
Take money out of your own company and it's a director's loan. Leave it overdrawn and HMRC adds a 33.75% Section 455 charge, plus a benefit-in-kind once it tops £10,000. Put your figures in and see what you owe, and the date to repay by to dodge the charge. Free, no sign-up.
Your loan account
Section 455 charge
Benefit-in-kind (only bites over £10,000)
A guide, not tax advice. It uses the simple position — a single balance still outstanding nine months after your year-end and the average method for the benefit-in-kind. It doesn't handle bed-and-breakfasting rules, the 30-day and arrangements rules, loans over £15,000, partial repayments timed through the year, or the S455 refund when you later clear the loan. Check the current rates and your own figures with your accountant. Nothing you type here leaves your browser.
Three things can bite — and two of them are avoidable.
The loan itself. Any money you take out of your company that isn't salary, a dividend or a legitimate expense is a loan to you. While the account is in credit (the company owes you), there's nothing to worry about. It's an overdrawn account — where you owe the company — that has tax consequences.
Section 455 tax (33.75%). If the loan is still outstanding nine months and one day after your company's year-end, the company pays a temporary tax of 33.75% of the balance. It's refundable — you get it back nine months after the end of the accounting period in which you clear the loan — but that can be years away, so it's real cash tied up. Repay the loan within nine months of your year-end and the charge never applies. That deadline is the single most useful date this tool gives you.
Benefit-in-kind. Separately, if your overdrawn loan tops £10,000 at any point in the tax year, the cheap (or interest-free) loan is a taxable benefit. The benefit is the loan at HMRC's official rate of interest, less any interest you actually paid. You pay income tax on it through your P11D; the company pays Class 1A National Insurance on top. Keep the balance under £10,000, or pay the company interest at the official rate, and this one disappears too.
None of this makes a director's loan a bad idea — it's a normal, useful tool for owner-managed companies. It just rewards keeping an eye on the balance and the calendar, which is exactly what this is for.
One place for the company and the property.
If you run property through a limited company, Stead keeps the documents, the compliance dates and a tax-year rental P&L together — so the figures behind your loan account aren't scattered across spreadsheets and inboxes.