Posted on 1st June 2026
Director’s Loans: How to Stay Clear of Unwanted Tax Charges
Director’s loans can offer flexibility for owner-managed businesses, but they can also create unwanted tax charges if they are not handled properly. This spotlight guide explains how director’s loan accounts work, when section 455 tax applies and why the position matters even more in 2026/27 following the increase in the section 455 rate for new loans made from 6 April 2026. It also covers the separate beneficial loan rules, the £10,000 threshold, anti-avoidance rules around quick repayments and the issues that can arise if a loan is written off. The guide’s key message is simple: director’s loans should never be treated as informal or harmless drawings. With regular monitoring, proper records and timely planning around dividends, repayments or payroll, it is usually possible to avoid a much more expensive tax problem later.
