S455 Tax

Section 455 Tax (S455 Tax)

Section 455 Tax (S455 Tax) is a tax payable on an overdrawn directors loan account.

As a director of a limited company you are able to loan your company money or take a loan from the company for cashflow reasons via a directors’ loan account. However if you have an overdrawn directors’ loan account 9 months after your company year-end you will be liable to declare this in s455 of your company tax returns.

In order to gain s455 relief you need to write off the director’s loan by repaying it from personal resources or by creating a surplus via Sovereign Corporate. Another option for profit extraction from the company is via dividends but this is subject to tax on dividends, see our dedicated page for more details including the dividend tax rate.

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