Directors Loan and Dividends

Vanessa_Essential
Vanessa_Essential Registered Posts: 12 New contributor 🐸
in Tax
Hi, this is my first time preparing limited company accounts and need some advice. In the 12 months of trading to 31st May 23, the profit is £110,000 and the directors loan account stands at £63,000 owing to the company. I have paid him a salary of £11908 and was going to put the rest as dividends, but now I am a bit anxious about the rules for being overdrawn and would like some basic guidance please. I'm assuming it's all down to the timing.

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  • uis143
    uis143 Registered Posts: 13 New contributor 🐸
    edited July 2023
    Hi Vanessa, if the company pays him a dividend within 9 months of the year end to clear his DLA then there won't be any section 455 tax owed by the company (but it should still be declared on the CT600A). Additionally, If no interest was charged on the DLA, then a benefit in kind would arise on the director for the beneficial loan which would need to be declared on a P11D.

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