Reclaiming S455 Tax
Reclaiming S455 Tax
Paid Section 455 tax on an overdrawn director's loan? Find out when S455 tax can be reclaimed, how to make the claim and when HMRC can repay it.
Yes. S455 tax can generally be reclaimed after the qualifying director's loan has been repaid, released or written off, subject to the statutory timing and anti-avoidance rules.
Reclaiming S455 Tax: How to Get Your Corporation Tax Back
If your company has paid Section 455 (S455) tax on an overdrawn director's loan account, the tax can normally be reclaimed once the loan has been repaid, released or written off.
The important point is timing. Where S455 tax has already become payable, HMRC will not normally repay the relief until 9 months and 1 day after the end of the Corporation Tax accounting period in which the repayment, release or write-off occurred.
Depending on when the claim is made, relief may be claimed through the CT600A supplementary pages, an amendment to the Company Tax Return, or HMRC's L2P service.
Section 455 tax is particularly relevant to owner-managed limited companies where a director or shareholder has an overdrawn director's loan account. The tax is designed as a temporary charge rather than necessarily a permanent cost: when the qualifying loan is genuinely cleared, the company can normally claim corresponding relief under Section 458 Corporation Tax Act 2010.
What Is S455 Tax?
Section 455 applies broadly where a UK close company makes a loan or advance to a participator, such as a shareholder-director, and the relevant amount remains outstanding beyond the statutory deadline.
Most small owner-managed UK limited companies are close companies, so the rules frequently arise where directors withdraw more money from their company than has been credited to their director's loan account.
What is the S455 tax rate?
| Date loan or advance made | S455 rate | S455 on £20,000 |
|---|---|---|
| From 6 April 2026 | 35.75% | £7,150 |
| 6 April 2022 – 5 April 2026 | 33.75% | £6,750 |
| 6 April 2016 – 5 April 2022 | 32.5% | £6,500 |
| Earlier loans | Historic rates may apply | Check the relevant period |
The rate applicable to a loan depends on when the loan or advance was made. This is particularly important for older director's loan balances that have remained outstanding across several accounting periods.
When Can You Reclaim S455 Tax?
A company can generally obtain S455 relief when the relevant loan has been:
- repaid to the company;
- released by the company; or
- written off.
However, becoming entitled to relief and receiving the repayment are not always simultaneous.
Example: When does an S455 refund become available?
Company year end: 31 March
Director repays the loan: 20 July 2026
The repayment therefore falls within the accounting period ending 31 March 2027.
The S455 relief becomes payable from 1 January 2028 — nine months and one day after 31 March 2027.
S455 Reclaim Date Calculator
Enter the end date of the Corporation Tax accounting period in which the director's loan was repaid, released or written off. The calculator will estimate the earliest date on which the S455 relief normally becomes repayable.
This calculator illustrates the general statutory timing rule only. The actual amount and availability of relief depend on the company's circumstances and the underlying transactions.
How to Reclaim S455 Tax Step by Step
Confirm how much S455 was originally paid
Check the relevant Company Tax Return, CT600A supplementary pages and the company's Corporation Tax records. Identify which loan or advances generated the original S455 liability.
Confirm that the loan has genuinely been cleared
Establish the amount and date of each repayment, release or write-off. Partial repayments can produce proportionate S455 relief.
Identify the accounting period containing the repayment
This is crucial because the end of this accounting period determines when deferred S455 relief becomes payable.
Calculate when the relief becomes due
For a later repayment, the refund is generally not available until 9 months and 1 day after the end of the accounting period in which the repayment, release or write-off occurred.
Choose the correct claim route
Depending on the timing, the claim may be made using CT600A, by amending the relevant Company Tax Return, or through HMRC's L2P process.
Keep supporting records
Retain the director's loan account ledger and evidence supporting the repayment or other transaction in case HMRC asks for further information.
CT600A or L2P: How Should You Reclaim S455?
The appropriate method depends largely on how much time has passed since the end of the accounting period in which the original loan was made.
| Situation | Typical reclaim route |
|---|---|
| Claim is within 2 years of the end of the accounting period in which the loan was taken out | Claim using CT600A with the Company Tax Return or amend the relevant return online |
| Return relates to a different accounting period | HMRC's L2P process may be required |
| Return is being amended in writing | L2P may be used with the claim |
| 2 years or more have passed since the end of the accounting period in which the loan was taken out | Use HMRC's L2P process, subject to the overall claim deadline |
HMRC also provides an online L2P service for close companies and authorised tax agents making qualifying claims.
What Information Do You Need to Reclaim S455 Tax?
Company information
- Company Unique Taxpayer Reference (UTR)
- Company bank or building society details
- Relevant CT600 and CT600A information
- Accounting period start and end dates
Loan information
- Date the original loan was made
- Original loan amount
- Date of each repayment
- Amount repaid, released or written off
- Date the S455 relief becomes due
Can You Reclaim S455 After a Partial Loan Repayment?
Yes. Where only part of a qualifying director's loan is repaid, the company can generally claim a corresponding proportion of the S455 tax attributable to that repayment.
Example: Partial repayment
A qualifying loan of £40,000 was made when the applicable S455 rate was 35.75%.
The initial S455 charge on £40,000 would be £14,300.
If the director subsequently makes a qualifying permanent repayment of £10,000, the potential S455 relief attributable to that £10,000 is £3,575, subject to the statutory rules and timing of the claim.
The remaining loan balance may continue to carry an S455 exposure until it is dealt with.
Beware of the S455 30-Day “Bed and Breakfasting” Rule
Simply repaying a director's loan immediately before the S455 deadline and borrowing the money back shortly afterwards does not necessarily remove the S455 liability.
Anti-avoidance provisions can match repayments against subsequent loans rather than treating the original loan as permanently repaid.
There is also a separate arrangements rule which can apply outside the straightforward 30-day test. Broadly, this becomes relevant where at least £15,000 is outstanding and arrangements exist for £5,000 or more to be borrowed again.
This is why a repayment should be reviewed carefully where a director expects to withdraw further company funds soon afterwards.
How Can a Director's Loan Be Repaid?
A director's loan does not necessarily have to be cleared by transferring cash back into the company bank account. Depending on the circumstances, possible methods can include:
Cash repayment
The director transfers money back to the company, reducing or clearing the overdrawn director's loan account.
Dividend credited to the loan
A lawfully declared dividend may potentially be credited against the director's loan balance where the shareholder is entitled to it and sufficient distributable profits exist.
Salary or bonus
Remuneration may potentially be credited against the balance, but PAYE and National Insurance consequences need to be considered.
Release or write-off
A company can release or write off a qualifying loan, but this can create separate Income Tax and National Insurance consequences and should not be treated as equivalent to a straightforward cash repayment.
Before clearing a loan with dividends, salary, assets or a write-off, the wider company and personal tax consequences should be considered.
Can S455 Tax Be Reclaimed If the Director's Loan Is Written Off?
Potentially, yes. Section 458 relief can apply where a qualifying loan is repaid, released or written off.
However, writing off a director's loan is very different from the director simply repaying it. A write-off or release can create an Income Tax liability for the individual and may also have National Insurance implications.
Can You Reclaim Interest Paid on Late S455 Tax?
No. Although the underlying S455 tax can potentially be reclaimed once the conditions for relief are satisfied, HMRC states that interest charged because the S455 tax was paid late cannot itself be reclaimed.
This makes it particularly important to identify overdrawn director's loan accounts before the Corporation Tax payment deadline rather than assuming that a future repayment of the loan will eliminate every cost.
How Far Back Can You Reclaim S455 Tax?
HMRC states that an S455 repayment claim must generally be made within four years. Older historic cases can have different rules, including loans repaid on or before 31 March 2010.
Common S455 Reclaim Mistakes
| Mistake | Why it matters |
|---|---|
| Claiming too early | HMRC will not normally repay deferred relief before the statutory relief date. |
| Using the wrong accounting period | The reclaim date is linked to the accounting period containing the repayment, release or write-off. |
| Ignoring partial repayments | Part of the S455 charge may already qualify for relief. |
| Repaying and immediately re-borrowing | The 30-day or arrangements rules may prevent the expected S455 relief. |
| Poor director's loan records | HMRC may need evidence showing exactly when and how the loan was cleared. |
| Assuming a write-off is tax-free | The director may face separate Income Tax and National Insurance consequences. |
| Missing the claim deadline | S455 refunds are subject to statutory time limits. |
Reclaiming S455 Tax FAQs
What is S455 tax?
S455 is a Corporation Tax charge that can arise when a close company makes a loan or advance to a participator, commonly a shareholder-director, and the relevant balance remains outstanding beyond the statutory deadline.
Can S455 tax be reclaimed?
Yes. A company can generally claim relief from S455 tax when the qualifying loan has been repaid, released or written off, subject to the relevant conditions and anti-avoidance provisions.
When can I reclaim S455 tax?
Where the tax has already been paid and the loan is subsequently cleared, relief is generally not payable until 9 months and 1 day after the end of the Corporation Tax accounting period in which the repayment, release or write-off occurred.
What is the S455 tax rate for 2026/27?
For loans or advances made on or after 6 April 2026, the S455 rate is 35.75%. The rate was 33.75% for loans made from 6 April 2022 to 5 April 2026.
Do I use CT600A or L2P to reclaim S455?
The correct route depends on the timing. Within the relevant amendment window the claim may be made through CT600A or an amended Company Tax Return. For later claims, or certain claims relating to a different accounting period, HMRC's L2P process may be required.
Can I reclaim S455 after a partial repayment?
Yes. A qualifying partial repayment can normally generate a proportionate amount of S455 relief, although the timing and anti-avoidance rules still need to be considered.
Can I repay the director's loan and immediately borrow it again?
This can be caught by the anti-avoidance rules. In particular, the 30-day rule can match certain repayments of £5,000 or more against new loans of £5,000 or more made around the repayment date. A separate arrangements rule can also apply in some cases.
Can S455 interest be reclaimed?
The S455 tax itself can potentially be reclaimed, but HMRC states that interest charged because the S455 tax was paid late cannot be reclaimed.
Does HMRC automatically refund S455?
No. The company must make the appropriate claim for relief. HMRC will then process the claim and, where the company is entitled to relief, revise the tax calculation and make or allocate the repayment as appropriate.
How long do I have to claim S455 tax back?
HMRC states that a claim must generally be made within four years. Special rules apply to certain much older repayments.
Related Director's Loan Guidance
If your company has an overdrawn loan account, you may also find our detailed guide to director's loan accounts useful. It explains how loan accounts arise, the accounting treatment and the wider company and personal tax considerations.
Need Help Reclaiming S455 Tax?
We help UK owner-managed limited companies review director's loan accounts, calculate S455 liabilities and relief, prepare Corporation Tax returns and deal with S455 repayment claims.
Speak to The Online Accountants