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Definition
A director's loan account tracks money flowing between a director and the company outside of salary, dividends or expenses. The director may lend the company money (the company owes them) or draw money out (they owe the company), and the balance is recorded here.
Why it matters
When the account is overdrawn — the director owes the company — tax charges and timing rules apply. It is why external finance is often cleaner than informal director funding. See director's loan vs business loan.
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