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HMRC · S455 director loan

Director's Loan S455 Tax Calculator

Take cash from your Ltd account that isn't salary or dividend? If the balance lingers 9 months past year-end, HMRC charges the company 33.75%. See the hit before it lands.

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Common questions

What is a director's loan?
Money taken out of the company that isn't salary, dividend or expenses repayment. The classic case: you withdraw cash from the business account for personal use, intending to repay it. HMRC treats the balance as a loan to the director.
What is S455 tax?
If a director's loan is still outstanding 9 months and 1 day after the company's year-end, HMRC charges the company 33.75% of the outstanding balance. It's a temporary tax — refunded when the loan is repaid — but the cash sits with HMRC in the meantime.
How is S455 reclaimed?
Repay the loan, then submit form L2P alongside the next CT600. HMRC refunds the S455 9 months and 1 day after the year-end in which the loan was repaid. Lag of up to 21 months — plan cashflow accordingly.
What about benefit-in-kind?
If the loan exceeds £10,000 at any point in the tax year, the director also has a benefit-in-kind on the imputed interest (currently 2.25% HMRC official rate). Reportable on a P11D and taxable as employment income. Different beast from S455.
How do I avoid S455?
Either repay the loan within 9 months of year-end, formalise it as a written loan with commercial interest paid back to the company, or declare it as a dividend (if there's distributable profit) or salary (with PAYE/NI) before year-end. The calc shows you the cost of doing nothing.