Director's loan accounts: what you need to know

A director's loan account tracks money moving between you and your limited company that isn't salary, dividends, or a business expense reimbursement. Getting it wrong can trigger unexpected tax charges.

What counts as a director's loan

Any money you take from the company that isn't formally salary or a declared dividend is typically recorded as a loan from the company to you — even informal withdrawals count.

The risk of an overdrawn account

If your loan account is overdrawn at your company's year end and isn't repaid within nine months, the company can face an additional tax charge, and you personally may face a benefit-in-kind charge if the loan is large enough.

Keeping it clean

Regular reconciliation, clear records of what's salary, dividend, expense, or loan, and repaying any overdrawn balance promptly all reduce the risk of a costly surprise.

Our advice

We monitor director's loan account balances as part of our bookkeeping and year-end service, so you know well in advance if action is needed before a deadline, not after.