Should I take the directors loan

And how should I treat the in my accounts

What is a Director's loan?

In simple words the directors loan is a loan that a director takes from its company (which is a separate legal entity). Since it is a “loan” the director has to return it to the company therefore a directors loan would be any money that the director is taking out from the company for personal use. It is not the salary, a dividend or an expense repayment. This also has nothing to do with the money you have previously paid into or loaned the company.

Why would I need to take a Loan from my Company?

You might have to borrow money from your company to cover your personal expenses. These could be any one off unexpected bills which could not be covered by the salary the company pays you and you were also not able to get any dividend since the company did not make any profits. However, if your company has enough liquid cash you might be able to borrow money from the company. This will be treated as a loan to the director and you will have to pay interest on it. This interest can be the market rate or it can be lower than the market rate depending on how things are settled between you and the company,

Directors should not borrow money on a regular basis as this comes with additional administrative work and also there are risks associated with it such as penalty costs if not paid on time.

How Much Loan can I borrow from a company?

You can borrow as much as your company can afford to lend. Although there is no legal limit, you would not want to borrow all the liquid cash from your company and exhaust its funds as this will create cash flow problems for the company.

Furthermore, there is a threshold of £10 000. If you borrow more than £10, 000 then it is treated as benefit in kind and the company will have to pay National Insurance on it. As a director you will have to report it in the self assessment tax return and pay taxes on it.

When Should I Repay The Loan?

The loan should be paid within 9 months of the corporation tax period. Corporation Tax will be charged on any unpaid loan at that time.

How much interest will be charged on the loan ?

It is upto the company as to how much interest they will charge on the loan. If the interest charged on the loan is below the market value then the difference will be treated as a benefit in kind and tax and National Insurance will be paid accordingly.

How and why Should I keep a record of the Directors Loan?

As part of your bookkeeping process you should maintain a directors loan account. In the directors loan account you should record all the money borrowed from the director or the money lent to the director.

You should have a proper record of the money borrowed from the company or money given to the company as a loan from the director because at the end of the financial year you will have to include in the balance sheet any money the director owes to the company (overdrawn) or if the company owes to the director (credit)

For more information on Directors' loans and how they will be treated in your accounts please contact Taxaccolega at 020 8127 078 and our team of accountants will be happy to help you. We will guide you on your personal taxes, corporation tax and your payroll.

CTA Box

See How Much You Can Save

CALL NOW

Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs.

Book a free Consultancy [wpforms id="34483"] Related Posts

ID Verification Form For Companies House

From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House.

Companies House will issue a personal code to PSCs.
Taxaccolega (ACSP) can help collect data and assist.
Please answer the questions and upload documents.

Personal Details

Fornames * Last Name * Date of Birth * Nationality * Place of Birth *

Contact Details

Current Address * Date you moved in at current address? * Previous Address(es) in last 12 months (if Any) Email * Phone *

Role in the Company *

I am a Director I am a Person with Significant Control (PSC)

Identity Documents

ID Document * Address Document *
Are you an Overseas Director and PSC? *

Additional (Overseas)

Overseas Supporting Docs *

Privacy & Consent

You are declaring that all documents and information provided by you are true and correct, you are consenting to use and store your personal data and consenting for Taxaccolega Chartered Accountants to act as Authorised Corporate Service Provider (ACSP) on your behalf.

I confirm that I have read and agree to the above Terms & Conditions and consent to the processing of my data by Taxaccolega Chartered Accountants for the purposes of identity verification with Companies House.

Terms & Conditions – Identity Verification Process

By submitting, you authorise Taxaccolega to process your data for ID verification with Companies House.

I agree to Terms*

1. Purpose of this Agreement
1.1 These Terms & Conditions apply to the collection and processing of personal data and identity documents required under the Economic Crime and Corporate Transparency Act 2023 and Companies House identity verification rules effective from 18 November 2025.
1.2 By submitting your details through our online form, you authorise Taxaccolega Chartered Accountants (as an Authorised Corporate Service Provider – ACSP) to process your information for the sole purpose of fulfilling the identity verification obligations set by Companies House.

2. Client Responsibilities
2.1 You confirm that all information and documents you provide are true, accurate, complete, and current.
2.2 You accept full responsibility for any false, misleading, or incomplete information supplied, and acknowledge that this may lead to penalties or rejection of your verification by Companies House.
2.3 You must notify us promptly of any change in your details (such as name, address, or role in the company) which may affect the verification process.

3. Our Role & Limitation
3.1 We act solely as an intermediary in submitting your information to Companies House.
3.2 We do not guarantee the acceptance, speed, or outcome of any identity verification by Companies House. The final decision rests solely with Companies House.
3.3 We shall not be liable for any loss, delay, penalty, or consequence arising from:
* (a) inaccurate or incomplete information provided by you,
* (b) delays or failures within Companies House systems,
* (c) rejection or failure of verification by Companies House, or
* (d) events outside our reasonable control.
3.4 Nothing in these Terms excludes liability for death, personal injury, fraud, or any liability which cannot be excluded under law..

4. Data Protection
4.1 We will process your personal data in accordance with the UK GDPR and the Data Protection Act 2018.
4.2 Your data will be used solely for the purpose of identity verification and related compliance requirements.
4.3 We will retain your information only as long as required by law or regulatory obligations.
4.4 We will not disclose your information to third parties other than Companies House or other parties legally entitled to it.

5. Client Consent
By ticking the consent box and submitting your details, you confirm that:
• You have read, understood, and agreed to these Terms & Conditions.
• You consent to Taxaccolega Chartered Accountants acting as your Authorised Corporate Service Provider (ACSP) for identity verification purposes.
• You consent to the processing, storage, and transfer of your personal data and documents in accordance with Section 4 above..

6. Governing Law & Jurisdiction
These Terms & Conditions are governed by and construed in accordance with the laws of England and Wales, and any disputes shall be subject to the exclusive jurisdiction of the courts of England and Wales.

Checkout

Regular Price: £49.99+VAT £35.00 + VAT

Net Amount: £35.00

VAT @ 20%: £7.00

Total: £42.00

Secure Payment

Full Name Address City Postcode Country Choose Payment Amount Card Details

Should I take the directors loan? And how should I treat them in my accounts