- S455 is a company charge on a director's loan unpaid after 9 months.
- The rate is 35.75% for loans made on or after 6 April 2026.
- It is refundable once the loan is repaid, via CT600A or form L2P.
S455 tax is a corporation tax charge on money a company director owes their company that is still outstanding nine months and one day after the company’s year end. The company pays it, not the director, and the rate is 35.75% for loans made on or after 6 April 2026 and 33.75% for loans made between 6 April 2022 and 5 April 2026. If you’re already staring at a charge, an accountant for your limited company can track the balance through the year and flag it before the clock runs down.
Most directors don’t set out to create an overdrawn loan account, and it’s usually not a sign anything has gone wrong. This guide explains what the charge is, when it bites, what it costs, how to clear the loan, and how to get the money back once you’ve repaid it.
What counts as a director’s loan for s455?
A director’s loan is any money you take out of your company that isn’t salary, a dividend, or repayment of money you genuinely lent the business. It sits in the director’s loan account, which is simply the running record of what you owe the company or it owes you. When you’ve taken out more than you’ve put in, the account is overdrawn, and that’s the balance s455 looks at.
The tricky part is how many everyday things count that people don’t expect. If you’ve done any of these, they’ll usually have gone through the loan account:
- Personal spending on the company card or from the business account.
- Money drawn in anticipation of a dividend that was never formally declared.
- Expenses claimed but never backed up with a receipt or a business reason.
- Cash taken out as a round-sum “advance” against future profits.
None of that is unusual and none of it is wrong in itself. It only becomes an s455 question when the balance is still owed at the year end.
For a fuller picture of how the loan account works across the year, see our guide to tax on directors’ loans. If you want to know what your company can legitimately pay for without it landing in the loan account, what the company can legitimately pay for sets out the ground rules.
When does s455 tax apply and what is the nine-month clock?
S455 doesn’t apply at your year end. It applies if the loan is still outstanding nine months and one day after it. That’s the same date your corporation tax is due, so the two run together.
Take a company with a 31 March 2026 year end. The loan account is overdrawn by £30,000 on that date, so the director has until 1 January 2027, nine months and one day later, to clear it.
Repay the full £30,000 before that date and no s455 is due at all. Miss it, and the company owes s455 on whatever is still outstanding on 1 January 2027.
Partial repayment counts. If the director pays back £20,000 and leaves £10,000 owing at the deadline, s455 applies only to the £10,000. The clock is per accounting period, so a loan that rolls across two year ends is measured against each one in turn.
What does s455 tax cost on a worked example?
The s455 rate tracks the higher rate of dividend tax, which is why it moved this year. For loans made on or after 6 April 2026 the rate is 35.75%, and for loans made between 6 April 2022 and 5 April 2026 it stays at 33.75%.
The date the loan was made sets the rate, so a single loan account can have more than one rate running through it if borrowing happened either side of 6 April 2026 [HMRC, Company Taxation Manual CTM61505, fetched 22 September 2026].
Here’s the 31 March 2026 company again, with £30,000 still owed on 1 January 2027 and the borrowing made after 6 April 2026. The company pays 35.75% of £30,000, which is £10,725, alongside its corporation tax. At the old 33.75% rate the same balance would have cost £10,125, so the rate change adds £600 on this loan for the same balance and the same delay.
| Loan made | Rate | S455 on £30,000 |
|---|---|---|
| 6 Apr 2022 to 5 Apr 2026 | 33.75% | £10,125 |
| On or after 6 Apr 2026 | 35.75% | £10,725 |
One practical wrinkle for 2026: HMRC has confirmed its corporation tax online filing service will not calculate the 35.75% rate until 6 April 2027. Where the new rate applies and you need to file before then, the return will need amending after that date to pick up the correct figure [HMRC guidance, fetched 22 September 2026].
How does the £10,000 threshold and the benefit-in-kind charge fit in?
This is the part people mix up with s455, and it’s a different tax on a different person. If your loan account goes over £10,000 at any point in the tax year and the company charges you less than HMRC’s official rate of interest, the difference is a taxable benefit in kind on you personally, not on the company.
The official rate is 3.75% from 6 April 2025, and HMRC can now change it during the year, so check the current figure on GOV.UK before you calculate anything [HMRC, expenses and benefits: loans, fetched 22 September 2026]. The benefit gets reported on a P11D, and the company pays Class 1A National Insurance on it.
Charging yourself interest at the official rate through the year removes the benefit-in-kind charge, but it does nothing to s455, which is about repayment. Because the personal filing sits on your own return, it’s worth reading alongside our director’s tax return service if the loan has tipped over the threshold.
How do you clear the loan and avoid s455 tax?
There are four common routes, and each has a tax cost somewhere. The honest answer is that none of them is free, which is the real reason to take advice before picking one.
| Route to clearing the loan | What it costs you |
|---|---|
| Repay in cash | No tax cost, but you need the cash. Watch the 30-day rule below. |
| Declare a dividend | Personal dividend tax for you, and you need distributable profit to do it. |
| Vote a bonus through payroll | Income tax and National Insurance, so often the most expensive route. |
| Write the loan off | Treated as dividend income for you, and usually National Insurance for the company. |
Repaying in cash is cleanest if you have it. Declaring a dividend is the common route, and you can only do it out of retained profit, so it depends on the company having the profit to distribute.
If you’re weighing a dividend against a bonus, our guide to salary, dividends or both works through the trade-offs. The specifics of the dividend charge, and how it affects what declaring one actually costs you, sit in tax on dividends.
Whichever route clears the loan, s455 is only ever paid or reclaimed alongside the company’s corporation tax, so the timing lines up with the rest of your filing. Our guide to how corporation tax is paid covers those dates.
Why doesn’t repaying and re-borrowing dodge s455?
The obvious dodge is to repay the loan just before the deadline and take it straight back out afterwards. HMRC closed this years ago, and it’s the part most competing guides skip over.
The rule is often called bed and breakfasting. If you repay £5,000 or more and then borrow £5,000 or more within 30 days of that repayment, HMRC disregards the repayment for s455. The loan is treated as never repaid, and the charge applies as if the money never moved.
There’s a second, wider rule for larger balances. Where the loan is £15,000 or more and there’s an arrangement to re-borrow when you repay, the repayment is ignored even outside the 30-day window. Because the charge then sits on top of your normal bill, it’s worth reading how corporation tax is paid so you know what’s due and when.
The practical takeaway is that the repayment has to be real. Money that goes out and comes back on a short loop won’t clear the charge.
How do you reclaim s455 after you repay?
S455 is temporary. Once the loan is repaid, written off or released, the company can reclaim the charge from HMRC in full. This is where most pages go thin, and it’s also where the timing catches people out, so it’s worth being precise.
How you claim depends on how long ago the accounting period ended:
- If you’re still within two years of the end of the accounting period in which the loan was made, you claim through the CT600A supplementary pages, either on the original return or by amending it.
- If more than two years have passed, or you’re claiming for an older period, you use form L2P, HMRC’s “loans to participators” reclaim form, which you can complete on GOV.UK or online.
The slow part is when the money actually comes back. The refund is not due until nine months and one day after the end of the accounting period in which the loan was repaid, not the period in which you paid the s455.
So if you repay the loan in May 2027, in a year ending 31 March 2028, the s455 doesn’t come back until 1 January 2029. That’s a long stretch for the company to be out of pocket, and it’s the single fact directors are most surprised by [HMRC, fetched 22 September 2026].
Claims for the relief must be made within four years of the end of the financial year in which the repayment falls, so don’t leave it indefinitely. If HMRC is slow to process a valid claim once it’s due, chase it in writing and keep the board minutes, the loan account record and the repayment evidence to hand. This is the point where the timing gets fiddly enough that it’s worth having an accountant for your limited company prepare the reclaim and confirm the dates, because a reclaim filed against the wrong period simply doesn’t pay out when you expect it to.
What happens to s455 if you close the company with the loan outstanding?
If you strike off or liquidate a company while the director’s loan is still overdrawn, the loan doesn’t just vanish. It’s an asset the company is owed, and the position has to be settled before the company closes.
In a solvent strike-off, an outstanding loan written off on the way out is normally treated as a distribution to you and taxed through your personal tax return. In an insolvent liquidation it’s worse: the liquidator can pursue you personally for the balance, because the money is owed to the company and its creditors have first claim on it. Selling the company with the loan in place is unusual and a buyer will expect it cleared as a condition of sale.
The short version is that a company with an overdrawn loan account can’t be closed cleanly until the loan is dealt with, and the tax treatment of clearing it on exit is rarely the cheapest option. Establish the s455 position before assuming any anticipated refund is cash you can rely on.
How Sleek helps with s455 and overdrawn loan accounts
An overdrawn loan account is a dated problem, and the fix is easier the earlier you see it coming. Sleek pairs a qualified accountant with AI that tracks your loan account through the year, so the balance is flagged before the nine-month deadline rather than in a letter afterwards, and every figure your accountant approves is there for you to see.
If you’re already facing a charge, we’ll prepare the reclaim, confirm which period it falls in and make sure the timing is right so the refund lands when it should.
Facing an s455 charge on your loan account?
FAQs on s455 tax
What is the s455 tax rate this year?
The s455 rate is 35.75% for loans made on or after 6 April 2026. Loans made between 6 April 2022 and 5 April 2026 stay at 33.75%, and the date the loan was made sets the rate, so one loan account can carry more than one rate.
Is s455 tax refundable?
Yes. S455 is a temporary charge and the company reclaims it in full once the loan is repaid, written off or released. It’s paid alongside corporation tax and reclaimed the same way.
How long does it take to get s455 back from HMRC?
The refund isn’t due until nine months and one day after the end of the accounting period in which you repaid the loan, not the period you paid the charge. In practice that can be well over a year after repayment, so plan cash flow around the wait.
Can I clear my director's loan with a dividend?
Yes, if the company has enough retained profit to declare one. The dividend clears the loan balance but creates personal dividend tax for you, so it moves the cost rather than removing it.
What if my company has no profit to declare a dividend from?
Then a dividend isn’t available, because dividends can only come out of distributable profit. Your options narrow to repaying in cash or voting a bonus through payroll, and a bonus brings income tax and National Insurance, so it’s usually the dearest route.
Does s455 apply to a loan from a company I don't own outright?
It can. S455 applies to loans from close companies to participators, which covers directors and shareholders and some of their relatives, not only sole owners. If you’re a participator in a close company and you owe it money at the deadline, the charge can apply.
What is the difference between s455 and the benefit-in-kind charge?
S455 is a corporation tax charge on the company for an unpaid loan. The benefit-in-kind charge is a personal tax on you when the loan goes over £10,000 and you’re charged less than HMRC’s official interest rate. They’re separate taxes on different people and can both apply to the same loan.
Do I pay s455 if I repay the loan before the year end?
No. S455 only looks at the balance outstanding nine months and one day after the year end. Repay in full before that date and there’s no charge, though the benefit-in-kind rules can still bite during the year if the balance went over £10,000.
What happens to an overdrawn loan account if I close the company?
The loan has to be settled before the company closes. Written off on a solvent strike-off it’s usually taxed as a distribution to you; in an insolvent liquidation the liquidator can pursue you personally for the balance.
