A director's loan account (DLA) tracks money you borrow from or lend to your own company. If you owe the company more than £10,000 at year end, HMRC charges Section 455 tax at 33.75% on the outstanding balance.
How It Works
Every time you take money from the company that is not salary, dividend, or expense reimbursement — it goes on the DLA. If you put money into the company, it is recorded the other way.
The S455 Trap
If your DLA is overdrawn (you owe the company) at your year end, the company pays 33.75% tax on the amount owed. You get this back when you repay the loan — but it is a cash flow hit.
How to Avoid It
- Declare dividends instead of drawing cash
- Repay the loan before your year end
- Keep your DLA tracked monthly (not annually)
- Talk to your accountant before your accounting period ends
For more tax obligations, see our corporation tax guide and compliance checklist.