Director's Loan Tax Calculator (S455)

Our director's loan calculator helps company directors work out, in seconds, exactly what an overdrawn director's loan account could cost in tax - covering both the section 455 (s455) charge on the company and the benefit-in-kind that can land on you personally. Whether you have dipped into the company bank account between dividend payments or you are planning a larger withdrawal, this tool turns a set of confusing HMRC rules into clear numbers so you can decide what to do before the deadline catches you out.

What this director's loan calculator does

A director's loan is any money you take out of (or put into) your limited company that is not salary, a dividend, an expense repayment, or money you had already lent the business. When you take out more than you have put in, your director's loan account (DLA) becomes overdrawn - in plain terms, you owe the company money. That position triggers two separate tax consequences, and this calculator models both:

• The s455 tax charge - a tax the company pays on a loan that is still outstanding nine months and one day after the company's year-end. Our tool applies the current upper dividend rate to your closing overdrawn balance and shows the bill.
• The beneficial-loan benefit-in-kind (BIK) - where the loan exceeds £10,000 at any point in the tax year and you are not paying interest at HMRC's official rate. The calculator estimates the taxable benefit, the income tax you pay, and the Class 1A National Insurance the company pays.

It is built specifically for owner-managed companies on 2026/27 rates, so the figures it produces reflect the thresholds and percentages in force for the current tax year rather than out-of-date numbers.

How to use the calculator: step by step

The fields above are deliberately short. Here is how to fill them in and read the result:

1. Enter your overdrawn loan balance. Use the amount you owe the company at the relevant date. For the s455 test this is the balance still outstanding nine months and one day after your company year-end.
2. Enter your company year-end date (your accounting reference date). The calculator uses this to work out your s455 payment deadline - the corporation tax due date for that period.
3. Add the average loan balance for the year if you want the benefit-in-kind estimate. The simplest method averages the opening and closing balances; the tool uses this to gauge whether the £10,000 BIK trigger is crossed.
4. State the interest you actually charged yourself, if any. If you pay the company interest at or above HMRC's official rate, the benefit-in-kind disappears - the calculator reflects that.
5. Read your results. You will see the potential s455 charge, the date it falls due, the estimated taxable BIK, your personal income tax on it, and the employer's Class 1A NI.

Change any number to model "what if" scenarios - for example, what repaying half the balance before the deadline would save.

How s455 tax is calculated

S455 (named after section 455 of the Corporation Tax Act 2010) exists to stop directors taking money out of their company tax-free by calling it a "loan" instead of a dividend or salary. The mechanics are:

• The charge applies to the overdrawn balance that remains unpaid nine months and one day after the company's accounting year-end.
• It is charged at the upper dividend rate on that outstanding amount.
• It is refundable. Once you repay the loan (or it is cleared by a dividend, bonus, or write-off), HMRC refunds the s455 paid - but only nine months and one day after the end of the accounting period in which the repayment was made. The refund can therefore lag the repayment by up to a year.

Worked example - s455

Suppose your company year-end is 31 March 2027 and your director's loan account is £30,000 overdrawn. You have until 1 January 2028 (nine months and one day later) to repay it. If you repay nothing by that date, the company owes s455 at the upper dividend rate of 35.75%:

£30,000 × 35.75% = £10,725 s455 tax.

That £10,725 is paid alongside the company's corporation tax. Repay the £30,000 loan in a later year and the company eventually reclaims the £10,725 - so think of it as a deposit with HMRC, not a permanent cost. The real pain is the cash-flow hit and the long wait for the refund.

Beware "bed and breakfasting". HMRC has anti-avoidance rules that stop you repaying the loan just before the deadline and re-borrowing it shortly after. If you repay £5,000 or more and take a similar amount out again within 30 days, the repayment is effectively ignored for s455 purposes.

The £10,000 beneficial-loan benefit-in-kind

S455 is the company's problem. The benefit-in-kind is yours. If your director's loan exceeds £10,000 at any point in the tax year and you do not pay the company interest at least at HMRC's official rate of interest, you are treated as receiving a taxable benefit - the value of the cheap or interest-free borrowing. Two bills follow:

• Income tax for you, at your marginal rate, on the cash equivalent of the benefit.
• Class 1A National Insurance for the company, currently at 15% of the same benefit, reported on form P11D and P11D(b).

Worked example - benefit-in-kind

Say your loan averages £40,000 across the year, you charge yourself no interest, and HMRC's official rate is around 3.75%. The deemed benefit is roughly:

£40,000 × 3.75% = £1,500 taxable benefit.

If you are a higher-rate taxpayer (40%), your personal income tax on that benefit is £1,500 × 40% = £600. The company also pays Class 1A NI of £1,500 × 15% = £225. Together that is £825 a year of pure cost for the privilege of an interest-free loan - on top of any s455. Pay the company interest at the official rate instead and the benefit, and both these bills, vanish (though the company then has a small amount of taxable interest income).

Scenarios and their consequences

The table below summarises the common situations directors find themselves in and what each one means for tax. Use the calculator to put pounds against your own figures.

How to avoid the charges

You do not have to swallow these costs. The most common ways directors keep their loan account clean are:

• Repay before the s455 deadline. Clearing the overdrawn balance within nine months and one day of year-end avoids s455 entirely. Diarise the date the moment your year-end passes.
• Clear the loan with a dividend or bonus. Declaring a dividend (if you have distributable profits) or a salary bonus that you offset against the loan removes the balance - but each has its own tax cost, so compare the options.
• Keep the balance under £10,000 at all times to sidestep the benefit-in-kind altogether.
• Charge yourself HMRC's official rate of interest if you must borrow more than £10,000. The company records the interest as income, but you avoid the BIK income tax and the company avoids Class 1A NI.
• Plan withdrawals around remuneration. Modelling salary and dividends in advance often removes the need to borrow at all. Our Salary vs Dividend Calculator helps you set an efficient mix, and the Corporation Tax Calculator shows the profit available to distribute.

Frequently asked questions

Is the s455 tax ever permanent?

No - s455 is refundable. Once the loan is repaid, cleared by a dividend or bonus, or written off, the company can reclaim the s455 it paid. The refund is only made nine months and one day after the end of the accounting period in which the repayment happened, so expect a delay rather than a permanent loss.

Does a small, short-term loan create a benefit-in-kind?

Generally no. If the total of all your loans from the company stays at or below £10,000 throughout the tax year, there is no beneficial-loan benefit-in-kind - even if you charge no interest. Cross £10,000 at any point, though, and the benefit can apply to the whole balance, not just the excess.

Can I just keep re-borrowing each year?

Not safely. HMRC's "bed and breakfasting" and 30-day rules are designed to catch directors who repay a loan to dodge s455 and then take the money straight back out. If you do this, the repayment can be ignored and the s455 charge stands.

Once you have your figures, read the full background, planning ideas and worked detail in our complete guide to director's loans.

This tool is general information, not personal financial or tax advice.