How to enter a director's loan waiver

Short version. In Step 2, open Tax adjustments and select “Add a director's loan waiver”. We support full and partial legal releases of ordinary cash loans where the company recognises a taxable profit-and-loss gain.

1. Enter the waiver

Enter the amount legally released, its effective date and the trading or non-trading treatment. For mixed borrowing, enter the trading portion. We calculate the remainder.

Enter the amount still owed in Creditors: due within one year if 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 remaining balance between those fields if necessary. Do not enter the released amount as the closing balance, and do not also add it to another income field. See FRS 105, paragraph 4.4. Keep your records of the release. 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 appears in 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.

3. 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 an equity entry, a debt-for-equity exchange, a statutory tax exception or another debt requiring different treatment. These can be valid transactions, but we do not yet calculate those routes. Contact support about the treatment you need. 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.