How to enter a director's loan waiver

1. Enter the waiver

1. Open Financial data → Tax adjustments → + Director's loan waiver.
2. Enter Amount legally waived and Date the waiver took effect.
3. Choose Accounting and Corporation Tax treatment. The options are Include all in trading profits, Include all as a non-trading loan relationship credit, Split between trading and non-trading, Not taxable: a statutory debt release exception applies, and Other accounting or tax treatment. If you choose Split between trading and non-trading, enter Amount included in trading profits. The remainder becomes the non-trading amount. Use the treatment you have prepared.
4. If a prior-year column applies, complete Prior-year director's loan waiver gain (if any) in Tax adjustments when that year had a waiver. This is the total gain from the prior year, not a figure for each current waiver. Leave it blank if there was no earlier waiver.
5. In Balance sheet, include the remaining loan in Creditors: due within one yearif the company cannot unconditionally defer repayment for at least 12 months after the reporting date. Otherwise use Creditors: due after more than one year. Split the prepared balance if necessary. Do not enter the released amount as the closing creditor.
6. If there is only a prior-year waiver and no current waiver, open Profit & loss → Additional prior-year figures → + Add a prior-year director's loan waiver gain and enter that year's prepared gain.
7. Review the waiver gain in the accounts and computation. It is included automatically, so do not add it to another income row. For two returns, check that it appears in the return containing the effective date you entered.

FRS 105 paragraph 4.4explains the liability classification. The supported waiver treatments recognise the whole release as a profit and loss gain. Use the separate scope explanation below for other treatments. We do not request an additional declaration or document upload.

2. Accounts and tax return

We show a separate director's loan waiver gain in your annual accounts and generate the Corporation Tax return automatically. You do not complete a separate form.

The trading portion is included in trading profits in box 155 and, after any brought-forward trading losses in box 160, net trading profits in box 165. The non-trading portion enters the loan relationship calculation, whose net profit may appear in box 170. A credit you choose to exclude under a statutory exception stays in the accounts but is removed from the trading result without entering box 170. A net deficit uses the existing deficit calculations. Do not enter the waiver as Other income. Box 205 is only for income that has not been included under another CT600 heading, so using it would count a supported waiver twice. See the HMRC guidance on trading loan credits and debits (CFM32020) and non-trading loan profits and deficits (CFM32030).

For the return itself, see HMRC's CT600 guide: Income, including boxes 155 and 170. You can use this guidance with any filing software.

For accounts needing two Corporation Tax returns, each waiver goes wholly into the return containing its effective date. You enter it once. A brought-forward non-trading deficit is a separate input, explained in our brought-forward deficit guide.

Will the director's loan waiver amount appear on the CT600 PDF?

No. The CT600 PDF has no separate waiver amount box. A taxable trading credit affects the total in boxes 155 and 165. A taxable non-trading credit enters the combined loan relationship calculation, whose net profit may appear in box 170. A split treatment can affect both totals. These boxes do not identify the waiver as a separate amount.

If you choose the statutory exception, the gain stays in the annual accounts. The tax computation PDF says that operating profit includes the waiver gain and shows Less: loan waiver credit not brought into account (statutory exception) with the amount. The CT600 PDF shows the taxable totals after that deduction. It does not show the excluded waiver separately in box 155, 170 or 205. For two CT600 returns, check the computation for the return containing the waiver's effective date.

3. When a release is not taxable

Choose Not taxable: a statutory debt release exception applies if your whole released cash loan amount is a profit and loss gain and you decide that a statutory exception means the credit is not brought into account for Corporation Tax. The gain stays in the accounts. The computation shows a line removing it from the taxable trading result. This is your treatment choice. We do not test the conditions or request evidence.

CTA 2009 section 322 sets out conditions A to E for release credits in an accounting period where an amortised cost basis is used. These include a statutory insolvency arrangement, a qualifying debt-for-equity exchange for ordinary shares, specified insolvency conditions without a connected companies relationship, certain bank stabilisation powers, and the corporate rescue condition. Read the full conditions in the legislation and HMRC CFM33180. For the corporate rescue condition, read CFM33191, CFM33192, CFM33193, CFM33194 and CFM33195. HMRC explains the debt-for-equity condition in CFM33200.

Section 358 is a separate case for a connected company creditor. It does not apply merely because the creditor is an individual director who owns shares. See HMRC CFM41080. A debt-for-equity release uses this option only if the whole released amount is a profit and loss gain. A release credited wholly or partly to equity is outside this form.

4. Other treatments

The non-trading component you declare is identified as finance income in the full accounts and as a loan-relationship credit in the computation. A mixed waiver is not all labelled non-trading. This tagging does not create a second charge. See how accounts and computation tags work.

A bookkeeping write-off does not by itself remove an obligation to repay. FRS 105 covers derecognition when that obligation ends and recognition of the gain in profit or loss. See FRS 105, paragraphs 9.25 and 9.26.

Select Other accounting or tax treatment for a release credited wholly or partly to equity, or for a debt such as unpaid salary or dividends. This form does not calculate those treatments. Calling a waiver a capital contribution does not by itself make it tax-free. HMRC explains the statutory exceptions in CFM33180: releases of debt and tax exceptions.

This is general guidance. If you are unsure how to account for or classify your release, consider taking advice on your circumstances before filing.