2 min read
How it works
A director’s loan account (DLA) tracks the balance between you and the company. In credit, the company owes you. Overdrawn, you owe the company — and that is a real debt.
The risks
An overdrawn DLA unpaid nine months after year end triggers a tax charge (S455), and can create a benefit-in-kind. If the company becomes insolvent, a liquidator will pursue you personally for the overdrawn balance. Draw dividends or salary properly instead of running up the DLA.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Is an overdrawn director's loan a problem?
It can be. It triggers a tax charge if unpaid nine months after year end, and on insolvency the company can recover the balance from you personally.
How do I avoid the risk?
Keep the account in credit, take money as properly declared salary or dividends, and clear any overdrawn balance before year end where possible.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.