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Overdrawn directors loan accounts: Don’t forget tax!

Shared from Tax Insider: Overdrawn directors loan accounts: Don’t forget tax!
By Jennifer Adams, July 2021

Jennifer Adams considers the tax implications of an overdrawn directors loan account. 

A directors loan account (DLA) records the transactions that occur between a company and its director, including any salary (if not directly attributed as a salary for an employee director), dividends, expenses, director's personal bills paid for by the company and reimbursements (e.g. company bills paid personally by the director and owed back by the company). 

Tax implications may arise if the company is a close company (i.e. broadly a company with up to five shareholders or any number of shareholder/directors, or 'associates' (e.g. relatives: parents, adult children etc.) and the account becomes overdrawn.  

Benefit-in-kind charge 

If a DLA is overdrawn by more than £10,000 at any time during

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