Directors who borrow from their company can trigger s455 tax. This guide explains how a Tax Return Accountant helps reclaim it after repayment. It also shows practical steps, forms, and timelines tailored for London businesses and Interface Accountants’ fixed-fee approach.

Table of Contents

TL;DR

s455 tax is a temporary 33.75% charge on unpaid director loans in close companies, applicable from 6 April 2022 onward.
Reclaim happens after repayment using CT600A or the L2P form filed with HMRC.
The reclaim window is four years from the accounting period of repayment; refunds typically arrive 9 months plus 1 day after year-end.
A fixed fee Tax Return Accountant service simplifies timings and penalties, especially with Interface Accountants.
Professional help ensures correct form choice, accurate timing and smooth HMRC communication.

What is s455 tax and who pays it?

Summary: s455 tax is a temporary charge on directors’ loans in close UK companies. It applies at 33.75% on the loan balance outstanding nine months after year end.

Definitions: The charge targets unpaid director loans (overdrawn director’s loan accounts) to stop interest-free borrowing from avoiding full taxation. It primarily affects directors who borrow from their company and leave funds outstanding. The aim is transparent director funding and proper tax treatment.

Examples/notes: If a director leaves £20,000 unpaid nine months after year end the company faces a 33.75% charge on that £20,000. The tax is a company liability, recoverable later if the loan is repaid.

When does s455 apply to directors’ loans?

Summary: s455 triggers when a close company has an overdrawn directors’ loan at the nine-month point after the accounting period.

Timing: The 9-month point marks when the charge is due. The balance remains chargeable until repayment or settlement.

Scope: The rule focuses on close companies. Large public companies are generally not in scope.

How to reclaim s455 tax after repayment

Summary: After repaying the loan, reclaim s455 by submitting HMRC forms to offset the charge already paid.

Verify repayment or set-off: Ensure the loan is fully repaid or cleared.
Gather docs: Loan ledger, repayment evidence and year-end accounts.
Choose a route: CT600A is common; L2P suits some settlements.
File online: Use Government Gateway or a fixed-fee service like Interface Accountants.
Track refund: HMRC usually pays about 9 months + 1 day after repayment.
Update records: Post-refund, adjust the director’s loan account.

What to expect: The repayment equals the s455 tax paid on the relevant balance. In most cases, interest on the charge isn’t reclaimable.

Forms and filing: CT600A vs L2P

CT600A is an amendment to reclaim via the corporation tax return. It’s suitable for standard repayments and year-end adjustments. It requires solid documentation and careful ledger work.

L2P is a gateway based online settlement for director loan repayments. It can be faster if eligible and links directly to your company records. Online access and correct linking are essential.

At a glance

Aspect	CT600A	L2P
Timing	Depends on accounting period adjustments	Often quicker online settlement
Documentation	Borrowing proof, repayment records	Online linkage to tax records
Best use	Standard adjustments	Gateway-based settlements

Key dates, deadlines and pitfalls

Summary: The rate is 33.75% for loans post 6 April 2022 applied nine months after year-end.

Reclaim window: Four years from the end of the repayment year.
Refund timing: Usually around 9 months + 1 day after repayment, subject to filing accuracy.
Pitfalls: Interest on s455 is typically not reclaimable; mis-timing can delay refunds.

How to use HMRC and practical help

Summary: HMRC filing via Gateway is straightforward with the right guidance. Practical steps keep the process smooth.

File L2P online via Government Gateway or locate CT600A options for adjustments. Check refund status online and contact HMRC if needed. Practical tips from a Tax Return Accountant include maintaining a clear director’s loan ledger, using fixed-fee services, and aligning reclaim with annual tax workflows.

Real life example / use case

Example A: A small tech contractor has a £9,000 loan, year-end 30 Jun 2023. Nine months later the loan is unpaid, s455 is £3,037.50. Repaid 30 Sep 2024; reclaimable by 31 Mar 2026 via L2P or CT600A.

Example B: A construction firm with a £60,000 loan repaid via dividend set-off. s455 = £20,250; reclaim via CT600A in the next cycle.

Example C: A £30,000 loan year-end 31 Mar 2025, unpaid to 1 Jan 2026; s455 £10,125; reclaimable after repayment using the appropriate form.

Real-life use-cases for a London-based Tax Return Accountant

Why engage a Tax Return Accountant: you get correct form selection, fixed-fee pricing and local HMRC know-how. Interface Accountants offers London-focused fixed-fee s455 reclaim support, from loan review to refunds.

Interface Accountants can help with end-to-end tax returns, s455 guidance and timely submissions. Their local presence makes HMRC communications smoother for London clients.

FAQ

What is s455 tax and who pays it?

It is a 33.75% charge on unpaid director loans in close UK companies, charged nine months after year-end.

Can s455 tax be reclaimed?

Yes, after repayment via CT600A or L2P with HMRC.

What are the key deadlines?

The four-year reclaim window; refunds usually ~9 months after repayment.

Do I reclaim interest charged on s455?

Generally no; specifics depend on HMRC guidance.

CT600A vs L2P?

CT600A is a general reclaim L2P is gateway-based for online settlements.

Can I reclaim if I set off against dividends?

Possible with proper documentation in the reclaim submission.

How can a Tax Return Accountant help?

They ensure correct form, timing and smooth HMRC communication.