What is S455 tax?
S455 tax is a temporary Corporation Tax charge of 33.75% on loans to company directors or shareholders that are still unpaid nine months and one day after year end.
What S455 tax means
When a close company (most owner-managed companies) lends money to a shareholder, usually a director who has taken out more than their salary and dividends, the balance sits in the director's loan account. If any of that loan is still outstanding nine months and one day after the end of the accounting period, the company must pay S455 tax at 33.75% on it.
The charge is refundable. Once the loan is repaid, written off or released, the company can reclaim the tax, but only from nine months and one day after the end of the accounting period in which the repayment happened. That can leave the money tied up for well over a year.
Example
A company's year end is 31 March 2026. At that date the director owes the company £20,000. The director repays £8,000 on 15 December 2026, before the deadline of 1 January 2027.
| Item | Amount |
|---|---|
| Loan outstanding at year end | £20,000 |
| Repaid within nine months | £8,000 |
| Still outstanding on 1 January 2027 | £12,000 |
| S455 tax at 33.75% | £4,050 |
The £4,050 is due with the company's Corporation Tax on 1 January 2027 and is reported on the CT600.
Why it matters for your business
S455 is a cash cost even though it comes back eventually. HMRC also has rules against repaying a loan just before the deadline and borrowing it again: repayments of £5,000 or more that are re-borrowed within 30 days can be ignored. A loan over £10,000 at any point, interest-free or below HMRC's official rate, is also a benefit in kind for the director. Clearing the balance by a properly declared dividend or bonus is often the answer, provided the company has profits to pay it. Our full guide covers director's loan accounts, S455 and HMRC penalties in more detail.
Common questions
Yes. When the loan is repaid, released or written off, the company can claim the S455 back. The refund is only available from nine months and one day after the end of the accounting period in which the repayment was made, so the cash can be held by HMRC for a long time.
Often, yes, provided the company has enough retained profits to declare a lawful dividend. The dividend is credited to your loan account instead of being paid in cash. You will pay dividend tax on it personally, so compare that cost with the S455 charge before deciding.