Answers · UK 2025/26
What is the S455 charge on an overdrawn director's loan account?
The S455 charge is 33.75% of the outstanding overdrawn director's loan account balance at the company's accounting year end.
Full answer
Section 455 of the Corporation Tax Act 2010 imposes a tax charge of 33.75% on any loan balance outstanding from a close company to a participator (usually the director-shareholder) nine months and one day after the end of the accounting period. The charge is not deductible against corporation tax. If the director repays the loan within the nine months, no S455 charge arises. If repaid later, the S455 charge is refunded from HMRC but only in the accounting period following repayment (so a one-year delay is common). Anti-bed-and-breakfasting rules prevent repayment and immediate re-borrowing within 30 days.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.