Glossary · UK
What is Section 455 Charge?
A temporary 35.75% corporation tax charge on an overdrawn director's loan account not repaid within nine months of the year end.
Full Definition
A Section 455 charge (under CTA 2010 s455) applies when a close company lends money to a participator — most commonly a director's loan — and the loan is still outstanding nine months and one day after the company's accounting period ends. The company must pay tax on the outstanding balance at a rate tied to the dividend upper rate. For loans made on or after 6 April 2026 the rate is 35.75% (mirroring the 2026/27 dividend upper rate, up from 33.75%). The charge is refundable: once the loan is repaid, the company can reclaim the s455 tax, though only nine months after the end of the accounting period in which repayment was made. Watch the «bed and breakfasting» anti-avoidance rules, which block repaying and re-borrowing within 30 days.