Share this content

Directors loan account overdrawn for several years

Director takes advance and intends to repay 4 years later

Didn't find your answer?

Director takes an advance from ltd co of £10,000 during year-ended 2020 and pays s455 tax of 32.5% when paying Corp Tax during 2021.

The directors loan then remains outstanding for say up to 4 years.

1. Is the s455 32.5% tax change a one-off payment and further payments of £3,250 do not need making each year the loan is outstanding?

2. Mechanics of repayment: When a loan not repaid until after 9 months +1 day after Accounting Period (AP) - is it correct to use form L2P to reclaim s455 tax?

3. Let's say loan repaid 10 months after end of AP. Must the company wait until the due date of it's next Corporation Tax liability to receive the refund? Is that in most cases set against that CT600 liability?

Replies (4)

Please login or register to join the discussion.

RLI
By lionofludesch
04th Dec 2020 12:37

If I borrow £10,000 in year 1 and don't repay it until year 3, I haven't borrowed anything in year 2.

S455 isn't a charge on the loan balance, it's a charge on the loans advanced.

Thanks (1)
avatar
By Paul Crowley
04th Dec 2020 13:07

'3. Let's say loan repaid 10 months after end of AP. Must the company wait until the due date of it's next Corporation Tax liability to receive the refund? Is that in most cases set against that CT600 liability?'

No payment and refund are separate
Refund will probably take some time

Thanks (1)
me.jpg
By clark.hall
04th Dec 2020 21:11

Thanks for replies. Just to quash a doubt - s455 tax can never become theirs for keeps? There’s no time limit to repay?

Thanks (0)
Replying to clark.hall:
Psycho
By Wilson Philips
04th Dec 2020 21:30

In theory, there could be (rare) circumstances in which s455 tax is never repaid. But nothing to do with expiry of time limits.

Thanks (3)
Share this content