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What micro-entity accounts disclose about directors’ loans

Last updated: 23 September 2026

Short version. Companies Act 2006 section 413 requires notes in a company’s individual accounts about advances and credit the company grants to its directors. It specifies the amount, interest rate, main conditions and amounts repaid, written off or waived, and the note gives totals. It also covers guarantees entered into on a director’s behalf.

1. What the note covers

The direction of the money matters. An advance is money the company gives to a director, or credit it provides. If a director lends money to the company, the company owes the director. That is a different balance and is not an advance granted by the company to its director under section 413.

For an advance or credit, the note describes the amount, interest rate, main conditions and any amounts repaid, written off or waived, with totals. For a guarantee the company enters into on behalf of a director, section 413 lists its main terms, maximum possible liability and amounts paid or liabilities incurred to fulfil it.

Section 413 also distinguishes individual accounts from group accounts. A parent company preparing group accounts may need the relevant details in the group accounts. The company’s circumstances and applicable reporting rules matter.

2. A simple example

Suppose a company advances £4,000 to a director during the year. The director repays £1,000 before the year end, leaving £3,000 outstanding. The note can show the £4,000 advance, any interest rate and main conditions, the £1,000 repayment, and the balance remaining. This accounts disclosure is separate from any Corporation Tax treatment of the loan.

A common mistake is to assume that a zero closing balance means there is nothing to describe. Another is to enter money the director lent to the company as if the company had advanced it to the director. Keep the two directions clear and use figures prepared for the accounts.

If you use #Simple CompanyTax to generate eligible micro-entity accounts, the Financial Data step has an Optional notes to the accounts section for prepared directors’ advance and guarantee details. It presents what you enter. It does not decide whether the transaction must be disclosed.

Official sources