Director loans at year end: repayment and tax are separate checks
A UK close company with a 31 December 2026 year end lends its shareholder-director £20,000 on 1 May 2026. The following summer, the director plans to repay part of it before the company's tax falls due. That repayment can reduce the company's charge, but it answers only one of the questions. The company charge, the relief timetable and the director's personal benefit position each need their own check.
Confirm the scope and date each advance
Section 455 generally charges a close company on loans or advances to an individual participator or their associate, subject to exceptions. A director title alone does not establish the charge, so check the company's status and who received the money. This is a tax on the company, not the individual's personal income tax.
The charge applies to loans created in the accounting period. It is not repeated each year on the whole balance already assessed, so old and new advances need separate dated records.
The s455 rate depends on the date of each advance and follows the dividend upper rate, not the company's normal corporation tax rate. If a general guidance page quotes 33.75%, check the advance date against HMRC's current CTM61505, which gives 35.75% for newer loans.
| Advance date | s455 rate |
|---|---|
| 6 April 2022 to 5 April 2026 | 33.75% |
| On or after 6 April 2026 | 35.75% |
Sources and context, checked :
A hypothetical company charge
In this hypothetical, the £20,000 advance has no exception, no further advances and no anti-avoidance match. Payment of s455 tax is normally due nine months and one day after the period ends, which is 1 October 2027 here. A repayment within nine months can give immediate s458 relief, so no s455 payment is required on that amount, subject to the matching restrictions below.
| Position at 30 September 2027 | Loan still chargeable | s455 at 35.75% |
|---|---|---|
| No repayment | £20,000 | £7,150 |
| Genuine £6,000 repayment on 31 August 2027, nothing redrawn | £14,000 | £5,005 |
Sources and context, checked :
Late repayment means delayed relief
Now suppose nothing is repaid by 30 September 2027, and the director repays the full loan on 15 November 2027. Relief is deferred to the due date for the accounting period containing the repayment. For a period ending 31 December 2027, relief normally cannot be repaid before 1 October 2028.
This is not an immediate bank refund. The company must claim within four years from the end of the financial year in which the repayment is made. That means the UK Corporation Tax financial year, which runs from 1 April to 31 March, not the company's accounting year. The 15 November 2027 repayment falls in the financial year ending 31 March 2028, so the claim deadline is 31 March 2032. That deadline is separate from the 1 October 2028 earliest relief date, so record the claim date alongside the repayment date.
Sources and context, checked :
Repayments followed by new borrowing
A year-end bank transfer does not secure relief if the money comes straight back. Two matching rules can reduce relief on the original loan, and waiting 31 days does not make a planned redraw safe. A direct dividend or net bonus credit that itself creates the relevant income tax charge can be excluded from these rules. Cash paid out and then returned, or a dividend from another company, does not automatically meet that exclusion.
- 30-day rule: repayments of £5,000 or more and new chargeable loans of £5,000 or more within 30 days can be matched. The new loan must fall after the end of the original accounting period.
- Arrangements rule: this can apply outside 30 days where at least £15,000 was outstanding before repayment and arrangements were then in place for at least £5,000 of new loans. No time limit makes a planned redraw automatically safe.
Sources and context, checked :
The individual benefit is a separate check
Beneficial loan employment tax can arise as well as s455. The small loan exemption looks at whether total outstanding beneficial loans stay at or below £10,000 throughout the tax year. Meeting that test does not exclude a shareholder loan from s455, and repaying before the s455 deadline does not erase a benefit already provided.
A £20,000 balance is above that limit, so the exemption cannot be assumed here. This example does not calculate the interest benefit or National Insurance, because each would need the rates and classes for the relevant periods checked in current guidance.
Writing off or releasing a loan is also not a cash repayment, and it can have separate personal tax and National Insurance consequences.
Sources and context, checked :
What the loan file should show
Build this before the nine-month date, while repayments and any redraw plans can still be reviewed.
- Each loan and advance date, reconciled to the bank and ledger.
- The year-end balance and actual repayment dates.
- The rate for each advance, with previously assessed debt kept separate.
- Any redraws or arrangements, and the documents behind direct credits.
- The s455 payment date, later relief claim date and separate individual benefit review.