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Overdrawn director’s loan account: accounts note or section 455 tax?

Last updated: 23 September 2026

Short version. The accounts note and section 455 tax are separate. The accounts note describes relevant advances or credit and repayments. Section 455 may charge a close company on certain loans or advances to a participator. A director loan account can raise one or both issues, depending on the facts.

1. What the accounts note says

Companies Act 2006 section 413 covers advances and credit granted by a company to its directors, including the amount, interest rate, main conditions and amounts repaid, written off or waived. The note also gives totals. The accounts disclosure describes the transaction. It is not the section 455 tax calculation.

2. When section 455 may apply

Section 455 applies to certain loans, advances or benefits provided by a close company to a participator or an associate. A director is not automatically a participator, and detailed exceptions and relief rules apply. HMRC’s guidance explains the conditions.

Repayment timing matters for the tax. HMRC says that if a loan remains outstanding at the accounting date but is repaid within nine months, a CT600A may still be required even where no section 455 liability is ultimately due. If a loan is made and wholly repaid within the same accounting period, HMRC says CT600A is not required on that basis unless the loan is released or written off. These CT600A rules do not replace the accounts disclosure question.

For example, suppose £6,000 is still owed at the year end and is repaid four months later. The company should consider the accounts note for the period and separately check the CT600A and section 455 treatment. The repayment date can affect the tax result, but it does not change what the accounts recorded at the year end.

  • Assuming that including an amount in the accounts note reports or pays section 455 tax.
  • Assuming every director is a participator or every overdrawn balance has the same tax treatment.
  • Assuming a later repayment changes the historical closing balance shown in the accounts.

#Simple CompanyTax handles supported CT600A entries separately from the optional directors’ advances and guarantees note in generated accounts. Ask a qualified adviser if you are unsure how a particular balance should be treated.

Official sources

  • Companies Act 2006, section 413 sets out the accounts disclosure for advances, credit and guarantees involving directors.
  • HMRC CTM61505 explains when section 455 applies to close-company loans and benefits.
  • HMRC EM8553 explains CT600A reporting where a loan is outstanding at the accounting date and repaid within nine months.
  • HMRC CTM61610 explains the timing of repayment relief under section 458.