Directors Loan Tax Calculator
Calculate S455 tax and benefit-in-kind on overdrawn directors loan accounts.
Rates checked against GOV.UK on 19 October 2026 · How we check our calculators
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Important Disclaimer
This tool provides indicative calculations only and does not constitute financial, accounting, tax, or legal advice. The accuracy of results depends on the accuracy of information you provide. Consult a qualified professional for complex situations.
Overview
A director's loan account goes overdrawn when you take more out of the company than you have put in or been paid as salary or dividends. If the company is a close company (most owner-managed limited companies are) and the balance is still outstanding 9 months after the end of the accounting period, the company pays section 455 tax: 33.75% on loans made before 6 April 2026 and 35.75% on loans made on or after 6 April 2026. It is due on the same date as the corporation tax, 9 months and 1 day after the year end. Separately, if the balance goes over £10,000 at any point in the tax year and you pay less than HMRC's official rate of interest (3.75% for 2026/27), the interest you save is a taxable benefit in kind. This calculator works out both charges, the deadline that avoids s455, and what writing the loan off would cost instead.
Worked Example (2026/27)
Worked Example: £25,000 Interest-Free Loan, Year End 31 March 2027
Scenario: a director draws £25,000 from the company in July 2026 and pays no interest. The company's accounting period ends on 31 March 2027.
Section 455: - The loan is made after 6 April 2026, so the rate is 35.75% - If it is still outstanding 9 months after the year end, the company pays £25,000 × 35.75% = £8,937.50, due on 1 January 2028 - Repay (or clear with a declared dividend or bonus) by 31 December 2027 and no s455 is due at all
Benefit in kind (the balance is over £10,000): - Deemed benefit for the months the loan is out: £25,000 × 3.75% × 9/12 ≈ £703 - Director's income tax at 40%: about £281 - Company's Class 1A NI at 15%: about £105, reported on the P11D
If s455 is paid, it is not lost: once the loan is repaid, the company reclaims it 9 months and 1 day after the end of the accounting period in which the repayment happens.
2026/27 Rates & Thresholds
| Item | 2026/27 |
|---|---|
| s455 rate, loans made before 6 April 2026 | 33.75% |
| s455 rate, loans made on or after 6 April 2026 | 35.75% |
| s455 due date | 9 months + 1 day after the accounting period ends |
| Benefit-in-kind threshold | Balance over £10,000 at any time in the tax year |
| HMRC official rate of interest | 3.75% |
| Class 1A NI on the benefit | 15% |
| 30-day matching rule | Repayments of £5,000+ redrawn within 30 days |
| Arrangements rule | Balances of £15,000+ repaid with an intention to redraw |
Repaying in time: what counts and what doesn't
The s455 charge is avoided if the loan is cleared within 9 months of the year end. Three ways count:
- Cash repayment that stays repaid.
- A dividend declared and credited to the loan account (it needs distributable reserves, and the director pays dividend tax on it).
- A bonus or salary credited to the loan account through payroll (income tax and NI apply, but it is deductible for corporation tax).
What doesn't count is repaying just before the deadline and drawing the money straight back out. Repayments of £5,000 or more redrawn within 30 days are matched to the new drawing, and for balances of £15,000 or more any repayment made with an intention to redraw is matched regardless of timing. HMRC calls this bed and breakfasting, and the rules (CTA 2010 s464C) treat the original loan as never repaid. Dividends and bonuses credited to the account are not caught, because they are taxed as income.
Getting s455 back
Section 455 is a temporary tax. When the loan is repaid, released or written off, the company can reclaim the s455 it paid on that amount. The refund falls due 9 months and 1 day after the end of the accounting period in which the repayment happens, not 9 months after the repayment itself. Claim it in the company tax return (CT600A pages) where that return can still be amended, otherwise with HMRC's form L2P, and within 4 years of the end of the period of repayment. HMRC does not chase it for you. Our guide to s455 tax, deadlines and worked examples goes through the timeline.
Writing the loan off instead
A company can formally release a director's loan, but it is rarely the cheapest route. The amount written off is taxed on the director like a dividend (10.75%, 35.75% or 39.35% for 2026/27), it is usually treated as earnings for National Insurance, so Class 1 NI including employer NI at 15% goes through payroll, and the company gets no corporation tax deduction. Any s455 already paid does come back. Where the company has distributable reserves, a dividend credited to the loan account gives the same income tax result without the employer NI. Use the write-off option in the calculator above to compare.
Common Mistakes HMRC Penalises
- Using the old 33.75% rate for a loan drawn on or after 6 April 2026. The rate follows the date of the loan, so one account can hold balances at both rates.
- Repaying before the deadline and redrawing within 30 days. The repayment is matched to the new drawing and s455 is charged anyway.
- Forgetting the benefit in kind. Crossing £10,000 for a single day brings the whole loan into the benefit for that tax year, with a P11D and 15% Class 1A NI.
- Pricing a loan at exactly the official rate and never checking it again. Since April 2025 HMRC can change the official rate during the tax year.
- Paying s455 and never reclaiming it. The refund date is set by the accounting period of repayment, often years later, and nobody reminds you.
- Declaring a dividend to clear the loan without enough distributable reserves. An unlawful dividend can be reclaimed by the company, which puts the loan straight back.
When to Seek Professional Advice
Talk to an accountant before the deadline if the balance is large, if the company may not have the reserves for a clearing dividend, if you are considering a write-off, or if the company is in financial difficulty. An overdrawn loan account is an asset of the company, and a liquidator will pursue it. The arithmetic here is reliable; the right route depends on the company's reserves and the director's other income.
Frequently Asked Questions
What is the S455 tax rate for overdrawn director loans in the 2026/27 tax year?+
35.75% for loans made on or after 6 April 2026, and 33.75% for loans made between 6 April 2022 and 5 April 2026. The rate follows the date each loan was made, because it is tied to the dividend upper rate for that tax year. It is charged on whatever part of the loan is still outstanding 9 months after the end of the company's accounting period.
When is s455 tax due on an overdrawn director's loan?+
Section 455 is due 9 months and 1 day after the end of the company's accounting period, the same day as its corporation tax. It only applies to the part of the loan still outstanding at that point, so a loan repaid, or cleared with a declared dividend or bonus, within 9 months of the year end attracts no s455 at all.
Can I repay my director's loan and borrow it again straight away?+
Not without consequences. Under the bed-and-breakfasting rules in CTA 2010 s464C, repayments of £5,000 or more that are redrawn within 30 days are matched to the new borrowing, and for balances of £15,000 or more any repayment made with an intention to redraw is matched regardless of timing. The original loan is treated as never repaid and s455 is charged. Clearing the loan with a dividend or bonus is not caught, because those are taxed as income.
Do I get s455 tax back when the loan is repaid?+
Yes. Once the loan is repaid, released or written off, the company can reclaim the s455 paid on that amount. The refund falls due 9 months and 1 day after the end of the accounting period in which the repayment happens. Claim it in the company tax return where it can still be amended, otherwise with HMRC's form L2P, within 4 years of the end of the period of repayment.
Is an interest-free director's loan a benefit in kind?+
It is if the balance goes over £10,000 at any point in the tax year and the director pays less than HMRC's official rate of interest, 3.75% for 2026/27. The interest saved is taxed on the director and the company pays 15% Class 1A National Insurance on it, reported on a P11D. Paying interest at the official rate, or keeping the balance at £10,000 or less all year, avoids it.
Sources and how this calculator is checked
The rates and thresholds in this calculator come from the GOV.UK pages below. We last checked them on 19 October 2026. The calculation engine is covered by 400+ automated tests, whose expected figures come from GOV.UK worked examples and PolicyEngine UK, an open-source model of the UK tax system. Read our methodology.
- Director's loans: if you owe your company money (gov.uk)
- Beneficial loan arrangements: HMRC official rates (gov.uk)
- Tax on dividends (gov.uk)
Spotted a figure that doesn't match GOV.UK? Tell us and we'll correct it.
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