Which Section 455 rate should I use?

Use the rate applicable to the loan date. HMRC lists 35.75% for loans made on or after 6 April 2026. Older advances and later transactions may need different treatment rather than one blended assumption.

Can I treat the estimated charge as the total tax cost?

No. The company Section 455 charge, personal benefit tax, employer NI, ordinary company profits and later write-off or repayment consequences are separate. This estimate is not an account reconciliation or a repayment recommendation.

Company and personal tax are separate

Director loan tax calculator UK: Section 455 and benefits

Use the actual loan dates, balances and interest records to understand potential charges. This is a bounded planning explanation, not an approval of a withdrawal or repayment arrangement.

A planning illustration for a close-company loan to a participator. The company's section 455 charge and an employment-related beneficial-loan charge are different tests. This does not establish that a loan qualifies for an exemption, relief or repayment.

Loan and interest inputs

Company accounting-period end

When was this loan advance made?

Split mixed-date advances into their actual tranches. Earlier loans and special arrangements are outside this estimate.

Loan amount remaining chargeable at the payment deadline (£)

Maximum aggregated beneficial-loan balance during the tax year (£)

Average beneficial-loan balance for this annual illustration (£)

Interest actually paid for this period (£)

Official interest rate used for this illustration (%)

Illustrative personal Income Tax rate (%)

Separate tax exposures

Illustrative section 455 company charge

£5,362.50

35.75% of the entered chargeable balance. Normal small-company payment date: 2028-01-01.

Illustrative beneficial-loan benefit: £750.00
Personal tax at the selected rate: £300.00
Company Class 1A NI at 15%: £112.50

The £10,000 beneficial-loan exemption depends on the aggregated balance throughout the year. Using a maximum balance as the annual average overstates interest when the loan changes. Actual P11D calculations can use an average or precise method, time apportionment and changing official rates; check the rate and interest actually paid for the relevant period.

The normal company payment date is nine months and one day after the period end; instalment-payment rules can differ. Repayment relief is conditional and has its own timing. Anti-avoidance rules can restrict relief where money is repaid and borrowed again. This tool does not promise an automatic refund or recommend paying a dividend or bonus without sufficient records and distributable reserves.

HMRC section 455 rates
Check official beneficial-loan interest rates

Three questions that need separate calculations

Company charge: is a qualifying loan to a participator still outstanding after the relevant repayment period?
Personal benefit: does the employment-related loan create a taxable interest benefit?
Repayment or release: what tax and claim consequences follow from the actual later transaction?

A loan is not automatically a dividend or salary. The treatment depends on the transaction and the relevant rules; a calculator cannot turn company cash into tax-free personal income.

Section 455: the date and outstanding balance matter

For loans within the close-company participator rules, a charge can arise where the loan is not repaid within nine months of the accounting-period end. HMRC lists a 35.75% rate for loans made on or after 6 April 2026; earlier loan dates may carry different rates.

For an illustrative £10,000 balance subject to the 35.75% rate, the charge is £10,000 × 35.75% = £3,575. This is a company charge, separate from ordinary Corporation Tax on profits and from any personal beneficial-loan tax. A real account with advances and repayments at different dates needs transaction-level review.

The beneficial-loan test is different

The £10,000 small-loan exemption concerns employment-related beneficial-loan rules, not a general exemption from Section 455. Check the aggregate maximum balance during the tax year and the applicable exemption conditions.

Where a taxable benefit arises, the calculation depends on the official interest rate, the balance method, the period and interest actually paid. A maximum balance is not automatically the average balance. An interest-rate illustration does not complete a P11D or employer Class 1A assessment.

Repayment is not an automatic refund instruction

A company may be able to claim relief after an eligible repayment, release or write-off. The timing and claim conditions matter, and a tax relief claim does not cancel every other liability. Interest on a late Section 455 payment is not simply refunded with the tax.

Rules can restrict relief for repayment followed by reborrowing or arrangements for further advances. Writing off a loan can create personal Income Tax and potentially National Insurance consequences. Obtain advice using the actual account rather than following a generic repayment strategy.

Records to bring to the calculation

Accounting-period end and each advance/repayment date.
Balances outstanding at the relevant dates, plus maximum and average balances where needed.
Interest actually charged and paid, and the rate applying during each period.
The director employment/shareholding position and any other connected loans.
Evidence for a later repayment and any associated new borrowing.

Official guidance

Frequently Asked Questions

Clear answers based on official HMRC rules and statutory guidance.

Not automatically. The small-loan exemption in the beneficial-loan rules is a different test from the company charge on qualifying loans to participators. Check each rule separately.

A loan is not automatically salary or a dividend

The loan balance, accounting-period end, repayment timing and whether interest is charged affect the company and director tax treatment.

Section 455 tax, beneficial-loan reporting and the rules on repayment/reborrowing are distinct. A temporary repayment or a later dividend does not remove every potential charge.

Check the rules for your circumstances

Official guidance supports the rules described here; it does not approve or certify this calculator. Confirm dates, eligibility and unsupported cases before making a financial decision.

Recommended Resources