Director's loan account (DLA)
What it is
A record of money a director borrows from or lends to their company, beyond salary, dividends or reimbursed expenses. If the director owes the company money at the year end, the account is 'overdrawn'. If the company owes the director, it is 'in credit'.
Why it matters
An overdrawn DLA not repaid within 9 months of year end triggers a Section 455 tax charge — 35.75% for loans made on or after 6 April 2026 (33.75% for earlier loans). The charge is refundable once the loan is cleared, but causes a cash-flow problem in the meantime.
Common mistake
Using the company bank account as a personal account without tracking what's borrowed. Disorganised records turn an overdrawn DLA into a surprise tax bill at year end.
Official source
GOV.UK — Director's loan accounts ↗Related
Disclaimer
General educational guidance only — not legal, tax, accounting, immigration, investment or financial advice. We don't guarantee the information is complete, current or suitable for your situation. Always check official sources (GOV.UK, Companies House, HMRC, the relevant professional body) and speak to a qualified professional before acting. Last reviewed: June 2026.