2 min read
Definition
Section 455 tax is a charge under the Corporation Tax Act 2010 of 33.75% (for loans from April 2022) on amounts a close company lends to its participators — usually directors — that remain unpaid more than nine months and one day after the accounting year end.
In plain terms
It's HMRC's way of stopping directors extracting profit as untaxed 'loans'. Pay the loan back and the tax comes back too, but slowly.
Why it matters for your company
Avoid it by clearing the loan in time, or plan the cash to cover the charge. See how to clear an overdrawn director's loan.
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