18. April 2026

HMRC is Watching Directors' Loans and Dividends

For many business owners, taking money from their company can feel simple: salary, dividends, and the odd “I’ll sort that later” withdrawal.

Unfortunately, HMRC knows that routine well.

Directors’ loans and dividends are under greater scrutiny, especially in owner-managed businesses where company and personal finances become a little too close.

A director’s loan account records money taken outside salary or dividends. If it is not repaid on time, the company could face a Section 455 tax charge. From April 2026, that rises to 35.75%.

It may be reclaimable later, but it is still an expensive reminder that the company bank account is not your personal wallet.

Dividends are also in the spotlight. They must be backed by profits and properly documented. If backdated or used to tidy earlier drawings, HMRC may challenge them.

That can mean extra tax, interest, penalties, and an awkward call to your accountant.

Keep records updated, review loan accounts regularly, and declare dividends correctly.

Better to review things now than have HMRC review them later.