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Overdrawn Director's Loans: Watch for the Section 455 Charge

Shared from Tax Insider: Overdrawn Director's Loans: Watch for the Section 455 Charge
By Jennifer Adams, June 2026

Jennifer Adams outlines the tax implications of an overdrawn director’s loan account at the end of an accounting period, and anti-avoidance rules designed to prevent misuse.  

At the end of the accounting period, it is not unusual to find that a director and shareholder of a closely-controlled company has overdrawn their directors’ loan account, resulting in a debit balance owed back to the company, with the ‘loan’ remaining unpaid.  

The ‘section 455’ charge 

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