Director's Loan Account | Barton Accountancy

Director's loan account

What is a director's loan account?

Your director's loan account (DLA) is essentially the running total of money you've put into your company versus money you've taken out over and above salary and declared dividends. It's a balance sheet item, not an income statement item, and it matters for tax.

If your DLA is overdrawn — meaning you owe the company money — HMRC can charge penalties. The most common is S455 tax, a temporary 33.75% charge on any overdrawn balance still outstanding 9 months after year-end. It's reclaimable, but it locks up cash and causes headaches. We handle all of this as part of your monthly service.

What we handle

DLA support.

Everything is included in your fixed monthly fee. No extras, no surprises.

Monthly reconciliation

Your DLA tracked in Xero and reconciled every month as part of management accounts.

S455 avoidance

We flag overdrawn DLAs before year-end so you can repay before the S455 clock starts.

Benefit in kind

If your DLA goes over £10k, there's a benefit in kind charge. We calculate it and include it on your P11D.

Dividend vs DLA strategy

We help you decide when to take dividends vs when a loan makes sense.

Repayment planning

If you're already overdrawn, we map out a legal, efficient way to clear it.

P11D forms

Annual P11D filed to HMRC for any benefits in kind arising from the DLA.

Sound familiar?

Most businesses don't have an accountant.
They have a filing service.

If any of these ring true, you're not getting what you should be.

01

You only hear from them at year-end

No check-ins, no planning, no conversation. Just a bill and a set of accounts you don't fully understand.

02

You're never sure where you stand

Your numbers are months out of date. You're making decisions based on gut feel, not real figures.

03

Surprise invoices keep landing

An email here, a phone call there — and suddenly your bill is twice what you expected. No one told you.

Common questions

Things people ask us.

What is S455 tax?

If a director owes money to their limited company 9 months after year-end, HMRC charges 33.75% tax on the overdrawn amount. It's a deterrent, not a punishment — it's reclaimable when the loan is eventually repaid. But it ties up cash and creates admin.

Can I take money out of my company as a loan instead of dividends?

Yes, in principle — but it has to be a genuine loan, documented, and ideally repaid within the tax year. If you leave it overdrawn past year-end, you run into S455 and potentially benefit-in-kind charges. For most directors, dividends are simpler and cheaper.

My previous accountant said my DLA was fine — is it?

We inherit DLA problems all the time. The most common issues are: DLA not reconciled for years, personal expenses posted to the company, and overdrawn balances that went unflagged. We do a full DLA audit as part of onboarding and tell you exactly where you stand.

Related services