Director's Loan Account S455 Tax Calculator

A director's loan account becomes "overdrawn" when a director takes more money out of their company (as loans, personal expenses paid by the company, or informal drawings) than they have put in or are owed in salary and dividends. If this overdrawn balance is not repaid within 9 months and 1 day of the company's accounting period end, the company must pay a Corporation Tax charge under Section 455 of the Corporation Tax Act 2010 — commonly called "S455 tax". The S455 rate is 33.75%, aligned with the additional (top) rate of dividend tax since 6 April 2022. This rate deliberately mirrors the dividend tax rate to prevent directors using loans as a tax-free alternative to taking dividends: without S455, a director could simply borrow from the company instead of declaring a dividend and paying tax on it. Crucially, S455 tax is not a permanent cost — it is repayable to the company once the loan is later repaid, written off, or released, under the rules in HMRC's Company Taxation Manual (CTM61600). However, the repayment does not happen immediately: HMRC repays the S455 tax nine months after the end of the accounting period in which the loan was actually repaid, meaning the cash can be tied up for well over a year in total. This calculator shows the S455 charge itself; it does not model the reclaim timing. A separate consideration applies if the loan exceeds £10,000 at any point in the tax year and is interest-free or charged below HMRC's official rate: the difference is treated as a taxable benefit in kind, reported on the director's P11D and subject to Income Tax on the director and Class 1A NI on the company — this is in addition to, not instead of, any S455 charge on the company. HMRC also has anti-avoidance rules targeting "bed and breakfasting" — repaying a loan just before the 9-month deadline and then redrawing a similar amount shortly afterwards to dodge S455. If a repayment of £5,000 or more is followed by new borrowing of a similar scale within 30 days, or there was already an intention to redraw when the loan was taken out, HMRC can disregard the repayment and charge S455 as if it never happened.