Quick answer
If you owe your company money through an overdrawn director’s loan account at the end of its accounting period, the company must pay a section 455 charge of 33.75% unless the loan is repaid within nine months and one day. The tax is refundable once the loan is cleared.
Updated October 2026 · Figures based on 2025/26 rates
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How an overdrawn loan arises
Taking money from the company that is not salary, dividend or expense repayment creates a loan from the company to you.
The section 455 charge
Outstanding loans at the year end trigger a charge at 33.75%, payable nine months and one day after the period end. It is repayable when the loan is repaid or written off.
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Benefit in kind rules
Loans over £10,000 may also create a taxable benefit and the company may owe Class 1A National Insurance, unless interest at the official rate is paid.
Avoiding problems
Repay before the deadline, avoid repaying then re-borrowing (bed and breakfasting rules), and keep clear records.
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Frequently asked questions
Is it better to take a dividend?
Often yes, if profits are available, because a dividend clears the loan without section 455 tax.
Does it appear on my Self Assessment?
Yes. Loans and any benefit in kind are reported on your return.
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