Section 455 tax is a measure taken to deter tax avoidance using close company loans.
If you have a balance remaining on the director’s loan account at the year-end you may be subject to S455 tax.
The loan account balance must be shown on the company corporation tax return (CT600). If the loan is repaid within 9 months of the accounting period then the relief is due immediately and no s455 tax is actually paid.
If the loan balance is below £10,000 and is not repaid within 9 months after accounting period then S455 tax is payable, however, if the balance of the loan is over £10,000 at any point then a benefit in kind would arise.
One way of avoiding S455 tax is for the company to declare dividends, however this is subject to distributable profit available in the company.
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