Directors Overdrawn Current Accounts

Advice to Director's on Overdrawn Loan or Current Accounts

Please note that like any debt to a company a director's loan account needs to be repaid. If you are company director considering insolvency but are concerned about the effect a directors overdrawn current has then please call us TODAY or apply online.

What is a director's current account or directors loan account

The directors current account is a an amount of money owed to the company by its director or directors. It cab be made up of the following:

  • Money drawn by the director for items such as salary, dividends, expenses outside if salary or dividends
  • Money taken out of the company by the director such as private expenses paid by the company.
  • Expenses that have not been reimbursed

Problems with Director's overdrawn loan or current Accounts

There are various problems associated with an overdrawn loan account therefore overdrawn directors accounts should be avoided. These issues are:

  • Directors loan accounts are illegal under the Companies Act
  • A overdrawn directors loan or current account is subject to a 25% Corporation Tax surcharge
  • There is a benefit in kind charge on the notional interest forgone on a directors overdrawn loan and current account - and this is subject to personal tax.

We provide advice on the following:

  • Directors disqualification procedures
  • Directors' rules and conduct requirements
  • How directors should legally operate a directors overdrawn loan or current accounts
  • The effect a directors overdrawn directors current account on an insolvency company
  • We can take enquiries from directors 24 hours a day via phone or email on issues relating to directors overdrawn current or loan accounts.

For information on how an overdrawn directors' loan account or current account can affect a decision to close or liquidate a company please call us TODAY or apply for advice online