A director’s loan is when you (or other close family members) receive money from your company that is not:

• A salary, dividend or expense repayment
• Money you’ve previously paid into or lent to the company

If you have an overdrawn director’s loan account, then you owe the company money. Once the accounting period has finished, you have nine months to repay the loan. Failure to repay the loan will result in the company incurring a substantial corporation tax penalty on the loan. You may have to pay additional tax if you have not repaid an overdrawn loan within 9 months
of the company’s accounting year end date. Your company may also have to pay tax if you’re a shareholder (sometimes called a ‘participator’) as well as a director.

Your personal and company tax responsibilities depend on whether the director’s loan account is:

• Overdrawn – you owe the company
• In credit – the company owes you

We will make sure you understand the implications for you regarding your director’s loan before you make a decision to commence winding up your company.