Directors’ loan accounts.

What is a directors’ loan?

The account tracks amounts owed by the director to the company or by the company to the director. Personal spending from the company account should be identified promptly.

Records and tax points

Keep a running balance and supporting records. The balance can affect the company’s tax reporting and the director’s personal position, particularly when the account is overdrawn.

Common errors to avoid

• Calling personal spending a business expense without evidence.
• Paying dividends without available profits.
• Leaving the account unreconciled at the year end.
• Ignoring repayments and withdrawals during the year.

Related guides.

Check rates, thresholds and deadlines for the correct tax year before you rely on them.