Free director's loan agreement template
A director's loan agreement records money lent between a company and a director, in either direction, with the amount, interest and repayment terms. Document it, minute the board approval, and watch the tax: an overdrawn loan not repaid within 9 months of the year end triggers a 33.75% s455 charge, and a balance over £10,000 is a benefit in kind. Download the free template below, or copy it; no email required.
Quick Reference
Direct Answer
A director's loan agreement records a loan between a company and a director (in either direction) with the amount, interest, repayment terms and direction. Key tax points: an overdrawn director's loan (director owes the company) not repaid within 9 months and 1 day of the company year end triggers a temporary s455 Corporation Tax charge of 33.75% of the outstanding amount (refundable on repayment); a balance over £10,000 is a benefit in kind (P11D, Class 1A NIC, official-rate interest); and loans to a director over £10,000 generally need shareholder approval under the Companies Act 2006.
Summary
This page provides a free downloadable UK director's loan agreement template plus the tax and approval rules, sourced to gov.uk: the s455 charge of 33.75% on an overdrawn loan not repaid within 9 months of the year end (refundable on repayment); the £10,000 benefit-in-kind threshold (P11D, Class 1A NIC, avoidable by charging at least HMRC's official rate of interest); the need to minute board approval and, above £10,000, get shareholder approval under the Companies Act 2006; and how the director's loan account affects a finance application.
This Page Covers
UK director's loan agreement template: the template itself, s455 tax, the £10,000 benefit-in-kind threshold, board and shareholder approval, and the effect on business finance
Not Covered Here
An overdrawn account's options (see /guides/directors-loan-account-overdrawn-options/), profit reporting (see /templates/profit-and-loss-template/), the balance sheet position (see /templates/balance-sheet-template/)
Download the template
A short agreement to adapt: the parties, the amount, interest, repayment and the direction of the loan. It is a starting point, not legal advice; for anything over £10,000 take advice and minute the approval.
DIRECTOR'S LOAN AGREEMENT Date Parties: the Company (number, registered office) and the Director Direction: Company lends to Director, OR Director lends to Company 1. The loan (amount, date) 2. Interest (rate; at or above HMRC official rate if over £10,000) 3. Repayment (on demand / instalments / by a date; early repay allowed) 4. Director's loan account (how it is recorded) 5. Tax note (s455 if overdrawn and not repaid in 9 months) 6. Governing law Signatures + board minute approving the loan
The tax and approval rules that matter
Sourced to gov.uk, Director's loans (checked 31 July 2026):
| Trigger | What happens | How to manage it |
|---|---|---|
| Overdrawn at year end, not repaid within 9 months + 1 day | Company pays s455 Corporation Tax of 33.75% of the outstanding amount (refundable when repaid) | Repay or clear before the 9-month deadline |
| Balance over £10,000 at any point | Benefit in kind: P11D, Class 1A NIC, possible Income Tax on the director at the official rate | Charge interest at or above HMRC's official rate |
| Loan to a director over £10,000 | Generally needs shareholder approval (Companies Act 2006) | Get approval and minute it before advancing |
Source: gov.uk, Director's loans (checked 31 July 2026)
The s455 charge is temporary and refundable, but the company is out of the cash until the loan is repaid, so clearing an overdrawn loan before the deadline is almost always the right call.
View as plain-text Markdown
### Overdrawn director's loan: the thresholds | Trigger | What happens | How to manage it | | --- | --- | --- | | Overdrawn at year end, not repaid within 9 months + 1 day | Company pays s455 Corporation Tax of 33.75% of the outstanding amount (refundable when repaid) | Repay or clear before the 9-month deadline | | Balance over £10,000 at any point | Benefit in kind: P11D, Class 1A NIC, possible Income Tax on the director at the official rate | Charge interest at or above HMRC's official rate | | Loan to a director over £10,000 | Generally needs shareholder approval (Companies Act 2006) | Get approval and minute it before advancing | Source: gov.uk, Director's loans (checked 31 July 2026) The s455 charge is temporary and refundable, but the company is out of the cash until the loan is repaid, so clearing an overdrawn loan before the deadline is almost always the right call.
“The classic mistake is treating the company account like a personal one all year, then discovering a five-figure overdrawn loan at the year end with a 33.75% charge attached. The agreement is the easy part; the discipline is keeping the loan account visible and clearing it before the nine-month deadline. If you cannot repay it in time, take advice early, a bed-and-breakfasting repayment just before year end and re-drawing after is exactly what HMRC's anti-avoidance rules catch.”
Already overdrawn?
If the loan account is overdrawn and you are weighing the options, see the options for an overdrawn director's loan account. The balance sheet shows where the loan sits in the company's position.
FAQs
What is a director's loan?
A director's loan is money moving between a company and a director that is not salary, dividend, expense repayment or money the director previously put in. It can go either way: the company lends to the director (the loan account goes overdrawn, the director owes the company) or the director lends to the company. Either way it is recorded in the director's loan account and should be documented in a short agreement and a board minute.
What is the s455 tax on an overdrawn director's loan?
If a director's loan account is overdrawn (the director owes the company) at the company year end and is not repaid within 9 months and 1 day of that year end, the company pays a temporary Corporation Tax charge, known as s455, of 33.75% of the amount still outstanding. It is refundable once the loan is repaid, but the company is out of the cash in the meantime, so overdrawn loans are best cleared before the deadline.
What happens if a director's loan is over £10,000?
If a director owes the company more than £10,000 at any point, the loan is treated as a benefit in kind: the company must report it on a P11D and pay Class 1A National Insurance, and the director may have an Income Tax charge based on HMRC's official rate of interest. You can avoid the benefit in kind by charging interest at or above the official rate. Loans to a director above £10,000 also generally need shareholder approval under the Companies Act 2006.
Does a director's loan need a written agreement?
It is not always a strict legal requirement, but it is strongly advisable and is what an accountant, auditor or lender will expect. A short agreement recording the amount, interest, repayment terms and direction of the loan, plus a board minute approving it, prevents disputes and makes the tax treatment clear. The template on this page is that starting point.
How does a director's loan affect getting business finance?
Lenders look at the director's loan account. A large overdrawn loan (the director owing the company) can be read as cash extracted from the business and can reduce what a lender will advance. A loan the director has put in (a credit balance) is generally viewed positively as invested capital. Either way, having it documented and the tax position clean helps.
Need funding instead of an overdrawn loan?
If you are drawing on the company for cash it cannot spare, external funding may be cheaper than the tax on an overdrawn loan. Tell us what you need and we surface the panel lenders most likely to approve, with no impact on your credit score to check.
Check your funding options →By Adam Parker. Reviewed by Oliver Mackman. Last reviewed 31 July 2026. This is general information, not tax or legal advice.