Director’s Loan Calculator
Work out what an overdrawn director’s loan account actually costs: the s455 charge on the company, the benefit in kind on you, and the date by which repayment removes the charge entirely.
Rates last checked 11 September 2026 · Tax year 2026/27
What this director’s loan calculator works out #
An overdrawn director’s loan account produces two separate tax charges, on two different people, measured over two different periods. Most directors loan calculators show one of them. This shows both, because clearing the loan in month eight removes the first and does nothing at all about the second.
- s455 falls on the company, is measured at the accounting period end, and disappears if the balance is repaid within nine months and a day.
- The benefit in kind falls on the director, is measured across the tax year, and disappears only if the company charges interest at the official rate.
How directors loan tax is charged #
If a director owes the company money at the accounting period end and it is still owed nine months and one day later, the company pays s455 tax on the outstanding balance. The rate is 35.75% for money advanced on or after 6 April 2026, and 33.75% for anything advanced before it.
That rate is not arbitrary. It tracks the dividend upper rate deliberately, so that taking money out as a loan is no cheaper than taking it as a dividend. When the dividend upper rate went up two points in April 2026, s455 went with it.
| Balance left outstanding | s455 on a new loan | s455 on a pre-April 2026 loan |
|---|---|---|
| £5,000.00 | £1,787.50 | £1,687.50 |
| £10,000.00 | £3,575.00 | £3,375.00 |
| £20,000.00 | £7,150.00 | £6,750.00 |
| £30,000.00 | £10,725.00 | £10,125.00 |
| £50,000.00 | £17,875.00 | £16,875.00 |
| £100,000.00 | £35,750.00 | £33,750.00 |
The directors loan repayment deadline #
Nine months and one day after the end of the accounting period in which the loan was made. It is the same date as the Corporation Tax payment deadline, which is not a coincidence: s455 is collected as part of the Corporation Tax payment.
Repayment is all or nothing per pound. Clear the whole balance and there is no charge at all. Clear half and s455 is charged on the other half. There is no tapering and no partial relief for repaying a week late.
Getting the money back afterwards is the slow part. s455 is refundable, but only nine months and one day after the end of the accounting period in which the repayment was made. Repay a loan in April, a month into the new accounting year, and the refund is not due until nine months after that year ends. HMRC can hold the money for well over a year.
Directors loan interest and the official rate #
The directors loan interest rate that matters is HMRC's official rate, not one you and the company agree between yourselves. The second charge has nothing to do with s455 and is not removed by repaying on time. If the loan exceeds £10,000.00 at any point in the tax year and the company charges less interest than HMRC’s official rate, currently 3.75%, the shortfall is a taxable benefit in kind.
The director pays Income Tax on the benefit at their marginal rate and the company pays Class 1A National Insurance at 15%. It is reported on a P11D. HMRC works the benefit out on an averaging method, taking the balance at the start and end of the tax year rather than the peak, which is what the calculator above uses.
Charging directors loan interest at the official rate removes the benefit entirely. It is not free money for the company though: the interest it receives is taxable income, so the choice is between a benefit in kind on you and Corporation Tax on the company. Which is cheaper depends on your marginal rate.
Stay under £10,000.00 for the whole year and none of this applies. That threshold is the single most useful number in the whole area.
The directors loan rules on repaying and re-borrowing #
The obvious move is to repay the balance just before the nine month deadline and take it straight back out afterwards. There are two rules that stop it.
The thirty day rule: if at least £5,000.00 is drawn out again within 30 days of a repayment, the repayment is ignored for s455 purposes. The charge applies as though it never happened.
The arrangements rule catches the slower version. Where the balance was £15,000.00 or more and there were arrangements in place to re-borrow at least £5,000.00, the repayment can be ignored even if the new drawing comes well after thirty days.
Neither rule bites where the repayment comes from a genuine source: a dividend voted and properly documented, a bonus run through payroll, or actual money the director has. The rules are aimed at money going round in a circle, not at money that really moved. There is more detail in the guide to the director’s loan account.
Do you need a director’s loan agreement? #
For a loan from a company to its own director there is no statutory requirement for a written agreement, and most small companies do not have one. What is required is that the loan is recorded: in the company’s accounting records, in the director’s loan account, and disclosed in the annual accounts as a related party transaction.
Company law adds a threshold. Under the Companies Act 2006 a loan of more than £10,000.00 to a director generally needs shareholder approval. In a single-director company where the director is also the sole shareholder that approval is a formality, but it should still be recorded as a written resolution.
A short written directors loan agreement, setting out the amount, the date, any interest and the repayment terms, costs nothing and answers most of the questions an inspector would ask. It also fixes the date the loan was advanced, which decides whether the 33.75% or the 35.75% rate applies.
What this calculator does not cover #
It assumes a single loan account with one director and no complicating features. It does not handle loans written off, which are taxed as a distribution on the director and carry National Insurance. It does not handle loans to participators who are not directors, loans in a close company with several shareholders, or the precise method where a loan is made and repaid partway through a tax year and the alternative precise benefit calculation is more favourable than averaging.
If the balance is large, if there is any thought of writing it off, or if the company might not survive to collect it, that is a conversation with an accountant rather than a calculator.
Common questions #
How is directors loan tax calculated?
There are two charges. The company pays s455 at 35.75% on any balance still outstanding nine months and one day after the accounting period end. Separately, if the loan is over £10,000 and the company charges less than HMRC's official rate of 3.75%, the director has a benefit in kind and the company pays Class 1A National Insurance on it.
What is the directors loan repayment deadline?
Nine months and one day after the end of the accounting period in which the loan was made. Repay the whole balance within that window and no s455 charge arises at all. Repay part of it and s455 is charged only on what is left.
Is s455 tax refundable?
Yes, but slowly. Once the loan is repaid, the s455 is reclaimed nine months and one day after the end of the accounting period in which the repayment happened. A loan repaid a month after the charge was paid can leave HMRC holding the money for the best part of two years.
What directors loan interest does the company have to charge?
None is legally required, but if the loan exceeds £10,000 at any point and the company charges less than the official rate of 3.75%, the shortfall is a taxable benefit. Charging interest at the official rate removes the benefit in kind, though the interest received is then taxable income for the company.
Do I need a directors loan agreement?
There is no statutory requirement for a written agreement on a small loan from a company to its own director, but the loan must be recorded in the company's accounts and in the director's loan account. Anything over £10,000 generally needs shareholder approval under the Companies Act 2006. A short written record of amount, date and repayment terms is sensible evidence.
What are the directors loan rules on repaying and re-borrowing?
If at least £5,000 is taken out again within 30 days of a repayment, the repayment is ignored for s455. Where the balance was £15,000 or more and there were arrangements to re-borrow, the repayment can be ignored even beyond 30 days.