Directors Loan interest & S455

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We have a director who is looking to borrow an amount from the company, but with a commercial rate of interest charged on the loan by the company.

I'm aware that if there is interest charged at a commercial rate there is no benefit in kind, but what about S455 tax, is this still payable on an overdrawn loan account where interest is being charged please?

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Danny Kent
By Viciuno
16th May 2024 09:36

Yes, subject to the usual s455 rules.

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By JCresswellTax
16th May 2024 09:52


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By Geoff56
16th May 2024 11:56

Yes, unless it is repaid within 9 months of the end of the accounting period in which the loan is made.

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By Duggimon
16th May 2024 12:14

Only if he's a shareholder, as well as the above caveats.

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Replying to Duggimon:
By Ruddles
16th May 2024 12:28

Strictly speaking, participator. I came across a case many years ago (when s419 was still a thing, I think) where tax was charged in respect of an overdrawn DLA where the directors, who were relatives of each other, were not shareholders but one had an overdrawn DLA, the other one was in credit. HMRC argued that the other was a participator and therefore the overdrawn DLA was within the scope of s455 (sic) as an advance to an associate of a participator. I can't, though, recall the outcome of that argument.

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