Directors Loan Account A Common Misconception

May 15, 2019

The misconception

Most business owners know that when a company makes a loan to a Director that isn’t repaid within 9 months of the company year-end then HMRC imposes a tax charge of 32.5%. This is called the S455 charge.

However it doesn’t apply to all Directors, you also have to be a shareholder. It also only applies to companies who is controlled by less than 5 individuals.

Action Point

If for some reason a loan is required from the company make the loan for the person in the family who isn’t a shareholder.

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