How to Reclaim S455 Tax After Repaying a Director's Loan (L2P)

The tax that comes back

Unlike almost every other tax, section 455 is designed to be refunded. It exists to park 33.75% (loans made before 6 April 2026) or 35.75% (on or after) of an overdrawn director's loan with HMRC until the loan is dealt with. Repay, release or write off the loan and the company is entitled to the money back — but the timing and the claim route trip people up.

When the refund falls due

Relief is due 9 months and 1 day after the end of the accounting period in which the repayment happens — mirroring the deadline that created the charge.

Worked example. Year end 31 March. A £30,000 loan drawn in June 2026 isn't repaid by 1 January 2028, so the company pays s455 of £10,725 (35.75%). The director repays the loan in full in May 2028 — inside the accounting period ending 31 March 2029 — so the £10,725 becomes repayable on 1 January 2030. Repaying earlier in the accounting period doesn't accelerate the refund: the clock runs from the period end.

How to claim

• Within 2 years of the end of the accounting period in which the loan was made: claim on the CT600A supplementary pages of the company tax return (or an amended return) for that period.
• Later than that: use HMRC's standalone form L2P (online), with details of the original loan, the s455 paid and the repayment. Attach the evidence — loan account extracts, dividend vouchers or bank entries showing the repayment.
• Time limit: a claim must be made within 4 years of the end of the accounting period in which the repayment, release or write-off occurred.

HMRC repays to the company (or sets off against corporation tax due). No interest is added for the period HMRC held the money in the normal case — one more reason repaying before the original deadline beats reclaiming after it.

The traps

• Partial repayments are matched to the loan, and relief comes back pro rata at the rate that applied to the repaid tranche.
• Repay-and-redraw doesn't count. Repayments of £5,000+ redrawn within 30 days (or any redraw where a £15,000+ balance was always intended to be redrawn) are matched against the new borrowing — no repayment, no refund. The full rules: bed and breakfasting.
• Write-offs qualify too — a release triggers the same relief, though it has income tax and NI costs of its own.
• Nobody chases this for you. Refunds sit unclaimed because the repayment happened years after the charge and the connection was never made. Diary the refund date the day the loan is repaid.

Work out what you're owed — and the exact date you can claim it — with the free Director's Loan Tax Calculator.

This article is general guidance, not tax advice. Claim mechanics vary with the company's filing position — confirm the route with your accountant.