The rate: 35.75% from 6 April 2026
Section 455 charges the company an amount equal to a percentage of the loan that “corresponds to the dividend upper rate ... for the tax year in which the loan or advance is made”3. Finance Act 2026 raised the dividend upper rate to 35.75% for 2026-27 onwards4,8. HMRC’s own manual confirms the s455 rate follows: “For loans made on or after 6 April 2022, the rate was 33.75 per cent and from 6 April 2026 35.75 per cent”2.
| Loan made | s455 rate |
|---|---|
| Before 6 April 2016 | 25%2 |
| 6 April 2016 to 5 April 2022 | 32.5%2 |
| 6 April 2022 to 5 April 2026 | 33.75%2 |
| On or after 6 April 2026 | 35.75%2,4 |
The date the money left the company decides the rate, not the year end. So a single accounting period that runs across 6 April 2026 can have loans at both rates, and the charge is worked out loan by loan2.
When s455 applies
It applies when a close company lends to a participator, such as a shareholder, or someone associated with one3,2. A close company is, broadly, one controlled by 5 or fewer participators, or by participators who are directors7, so a company owned and run by its directors usually is one. The charge is on new loans made in each accounting period, not on the whole balance: tax already paid on last year’s loan isn’t charged again2.
If the loan is repaid within 9 months of the end of the accounting period, there is no s455 charge, but you still show what was owed at the year end on form CT600A with the Company Tax Return1.
A worked example
A director takes £12,000 from the company on 15 June 2026. The company’s year ends on 31 March 2027, and the director repays £4,000 before 31 December 2027, within nine months of the year end.
- Still owed after 9 months: £8,000.
- The loan was made on or after 6 April 2026, so the rate is 35.75%: s455 tax of £2,860.00.
- It is due with the Corporation Tax, on 1 January 20283.
- The director repays the last £8,000 in February 2028, in the accounting period ending 31 March 2028. The company can claim the £2,860.00 back from 1 January 20291,5.
Had the same £12,000 been taken on 15 March 2026, before the rate changed, the s455 tax on £8,000 would be £2,700.002.
Work out your own figure
Put in your own loan, the date it was taken, the end of that accounting period and what was repaid in time.
Repay the rest later and the company can reclaim this tax, but not before 9 months and 1 day after the end of the accounting period the repayment falls in.
Bed and breakfasting: the 30-day rule
Repaying a loan just before the 9 months are up and borrowing it straight back doesn’t avoid s455. If, within any 30 days, at least £5,000 is repaid and at least £5,000 is lent again in a later accounting period, the repayment is matched against the new loan instead of the old one6. A second rule catches arrangements to re-borrow when £15,000 or more was owed before the repayment6,1. These rules sit in section 464ZA of the Corporation Tax Act 2010, which replaced the earlier version from 30 October 20246. A repayment made by declaring a dividend or salary, on which the director pays income tax, is outside them6.
Getting the tax back
Once the loan is repaid, written off or released, the company can reclaim the s455 tax, but not the interest charged on it1. The relief is not given before 9 months and 1 day after the end of the accounting period in which the repayment happened, and must be claimed within 4 years of the end of the financial year of the repayment1,5. Within 2 years of the end of the period the loan was made in, you claim on the CT600A; after that, on form L2P1.
Tax for the director, too
The director has their own rules1:
- Over £10,000 owed at any time in the year: the company treats the loan as a benefit in kind and deducts Class 1 National Insurance, and the director reports it on their Self Assessment return. Tax may be due at the official rate of interest1.
- Interest below the official rate: the shortfall is a benefit in kind, and the interest paid is company income1.
- Written off or released: the company deducts Class 1 National Insurance through payroll, and the director pays income tax through Self Assessment1.
When the company owes you
If you lend money to your company, the company pays no Corporation Tax on it. If you charge interest, it’s a business expense for the company and income for you: the company pays you the interest less 20% income tax, and reports and pays that tax every quarter on form CT611.
Dividends and the loan account
Clearing a loan with a dividend is common, but a dividend is taxed on the director: from 6 April 2026 at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band, after the £500 dividend allowance8. Note that 35.75% is also the s455 rate, which is no coincidence: the law ties one to the other3,4.
Fileyear asks about any money taken out during the year, dates each loan so the right rate applies, and prepares the CT600A with the Company Tax Return. To work out the Corporation Tax itself, use the Corporation Tax calculator; the deadlines are in When are company accounts due?