What happens if I owe money to my company at year end?

An overdrawn director’s loan account means you have taken more from the company than you have put in, excluding properly recorded salary, dividends and expenses. For a close company, a loan to a shareholder director that remains outstanding more than nine months after the accounting period ends can trigger a separate company tax charge. This is not the same as paying Corporation Tax on profits. The charge may be recoverable after a qualifying repayment, but the timing rules can delay the refund. A loan can also create a taxable benefit if insufficient interest is paid. These are separate checks, so clearing one issue does not automatically clear the other.

Start by checking the loan ledger against the bank, payroll, expense claims and dividend paperwork. A missing expense claim or an incorrectly posted payment can distort the balance. Then agree a repayment plan that fits your personal finances and the company’s cash needs. A dividend can only help where there are sufficient distributable profits and the correct approvals; extra salary has its own payroll costs. Repaying a loan and borrowing again shortly afterwards may fall within anti-avoidance rules. CASS can help you understand the balance, identify the relevant deadlines and compare the tax and cash consequences before you decide how to clear it.