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Company guarantees for a director’s personal borrowing

Last updated: 23 September 2026

Short version. Companies Act 2006 section 413 requires a company’s accounts to include details of guarantees it enters into on behalf of its directors. The note includes the guarantee’s main terms, the company’s maximum possible liability and any amounts paid or liabilities incurred to fulfil it.

1. What the note describes

A company guarantee for a director’s personal borrowing is an agreement that could make the company responsible if the borrower does not pay. Section 413 asks for the company’s exposure and the terms of the arrangement. The maximum liability is the maximum amount the company could have to pay under the guarantee. Amounts paid to meet a call on the guarantee are a separate detail.

This is different from a director giving a personal guarantee for a loan taken out by the company. The direction of the guarantee determines what arrangement you are describing. Other accounting disclosures may still depend on the company’s circumstances.

2. A simple example

Suppose a bank lends £20,000 to a director for a personal purpose and the company guarantees up to £8,000. If the company has not paid anything under the guarantee, the possible £8,000 liability and the main terms describe its exposure. If the bank later calls on the guarantee and the company pays £2,000, that payment is also relevant to the note.

A common mistake is to enter the director’s entire personal borrowing as the company’s guarantee liability. The amount to disclose is the company’s maximum liability under the guarantee. Another mistake is to omit the guarantee because the bank has not called on it. The note concerns the arrangement as well as any payment made under it.

#Simple CompanyTax lets customers add prepared guarantee terms and amounts in the Optional notes to the accounts section for generated accounts. It does not determine what the company is required to disclose.

Use the agreement to identify who borrowed, who gave the guarantee, its main terms and the maximum exposure. Keep the company’s own guarantee separate from any personal security the director gave for the company’s borrowing. If you are unsure how the arrangement should be presented, ask a qualified accounting adviser.

Official sources