A quick note: this article is general information, not personal advice. Tax and accounting rules change and everyone's situation is different, so please don't act on anything here without checking how it applies to you. We'd be happy to help — get in touch before making any decisions.
Quick answer
For a typical close company, section 455 tax on a relevant shareholder loan is payable nine months and one day after the end of the company's accounting period if the loan remains outstanding. A genuine repayment before that payment date can generally prevent the company having to pay section 455 on the repaid amount, subject to anti-avoidance matching rules.
At a glance
- The clock runs from the company's accounting-period end, not from the date you first borrowed the money.
- The payment date is nine months and one day after the accounting period ends — this is the standard Corporation Tax payment date for section 455.
- Relevant loans made from 6 April 2026 can be charged at 35.75% if still outstanding at that date.
- A temporary repayment followed by new borrowing can be caught by the 30-day matching rule or the arrangements rule.
- Repaying late can still generate section 455 relief, but the company may wait a considerable time for the cash refund from HMRC.
How do I calculate the 9-month deadline?
Start with the final day of the company's accounting period and move forward nine months and one day. That is the normal section 455 payment date — and therefore the deadline by which the relevant shareholder loan must be genuinely cleared to avoid the charge.
For the full background on section 455 and how it arises in the first place, read Section 455 Tax Explained and our Director's Loan Accounts Explained guide.
Example 1: 31 December year end
Accounting period ends: 31 December 2026
Nine months later: 30 September 2027
Payment date: 1 October 2027
Example 2: 31 March year end
Accounting period ends: 31 March 2027
Payment date: 1 January 2028
Always confirm the actual accounting period rather than assuming it matches the calendar year — many small companies have non-December year ends.
What happens if I repay before the deadline?
If the relevant shareholder loan is genuinely repaid before the section 455 payment date, the corresponding tax generally does not have to be paid, subject to the statutory matching rules. The company can still have reporting requirements, so do not simply remove the DLA from the accounts without reflecting what happened.
What happens if I miss the deadline?
The company can become liable to pay section 455 tax on the outstanding chargeable amount. For a £50,000 relevant loan made on or after 6 April 2026:
£50,000 × 35.75% = £17,875
The £17,875 tax does not reduce the £50,000 debt still due from the director to the company.
Can I get the tax back if I repay later?
Generally, section 455 relief can become available following a genuine repayment, release or write-off. The cash refund is not necessarily immediate — the statutory timing means there can be a long gap between the director repaying the loan and the company recovering the section 455 tax from HMRC. That is why a late repayment can remain painful even where the tax is ultimately recoverable. See How to Clear an Overdrawn Director's Loan Account for the full range of clearance strategies.
Can I repay the loan just before the deadline and take it back afterwards?
Not safely as a general strategy. The 30-day matching rule can apply where repayments of at least £5,000 and new chargeable loans of at least £5,000 fall within the relevant window. There is also an arrangements rule where at least £15,000 is outstanding and arrangements exist for at least £5,000 to be borrowed again. The principle is simple: the repayment needs to represent a genuine reduction in the shareholder's indebtedness, not a short-term round trip designed to cross the deadline. Full details of these rules are in the Section 455 Tax Explained guide.
Does the £10,000 rule change the nine-month deadline?
No. The £10,000 beneficial-loan exemption and section 455 are separate regimes. A £9,000 shareholder loan may still be relevant to section 455 even though it remains below the employment-related beneficial-loan threshold. Conversely, a loan above £10,000 can create a beneficial-loan employment benefit before the nine-month section 455 payment date arrives — so there may be two separate issues to address.
Should I wait until month nine to deal with the DLA?
Usually not. By month nine your available options may be narrower. For example: company profits may have fallen; distributable reserves may be insufficient for the dividend you expected; the director may no longer have the personal cash to repay; a large beneficial-loan charge may already have arisen; and rushed transactions can create matching-rule problems. Review the DLA soon after the accounting year end — preferably during the year as well.
What we see in practice
The deadline itself is simple. The planning difficulty comes from directors discovering the DLA too late. A good year-end process should flag every material overdrawn DLA, state the exact section 455 payment date and set out the intended clearance plan. It should not sit unnoticed in a set of accounts until the tax payment is nearly due. If you would like help reviewing a director's loan position before a deadline, our business accounting team can work through the options with you.
