Definition
Section 455 tax (s455) is a temporary charge, paid like Corporation Tax, on close company loans to participators, usually director-shareholders, that are still outstanding 9 months and 1 day after the end of the accounting period. The rate is 35.75% for loans made on or after 6 April 2026 and 33.75% for loans made from 6 April 2022 to 5 April 2026. The company can reclaim it once the loan is repaid or written off.
Who it applies to
Only close companies: broadly, those controlled by five or fewer participators, or by participators who are directors, which covers most owner-managed companies. The charge is named after section 455 of the Corporation Tax Act 2010 and reported on form CT600A.
Getting the tax back
Relief is due 9 months and 1 day after the end of the accounting period in which the loan was repaid, released or written off. Claims within 2 years go on form CT600A; later claims, up to 4 years, use form L2P.
Example
Birch Ltd’s year ends on 31 March 2026. Its director borrowed £20,000 in January 2026 and still owes it on 1 January 2027, so the company owes s455 of £6,750 (33.75%, as the loan predates 6 April 2026), due that day with its Corporation Tax.
See how the s455 charge works for a fuller example. SmartFiling’s Corporation Tax filing service files the CT600.
Related questions
- What is a director's loan account? The company's record of money a director owes it, or is owed by it, outside salary, dividends and repaid expenses.
- Does the director pay s455? No, the company does, although a loan over £10,000 or a written-off loan can create separate tax for the director.
Related terms
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Director's loan account
A director's loan account (DLA) is a limited company's record of money moving between a director and the company other than salary, dividends or repaid expenses.
Read definition -
Close company
A close company is, broadly, a UK company controlled by five or fewer shareholders (called participators), or by any number of participators who are also directors.
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Corporation Tax
Corporation Tax is the tax UK limited companies pay to HM Revenue and Customs (HMRC) on their taxable profits.
Read definition
