This article is for you if:
You are facing questions about money taken from, or paid into, your limited company.
You are considering whether a payment was salary, a dividend, an expense repayment or a director’s loan.
An issue has arisen because the company accounts, bank statements and your own understanding do not match.
The quick answer: a director’s loan account records money moving between you and your company outside salary, dividends and properly reimbursed expenses. The evidence matters more than the label.
One payment can have very different meanings
A limited company is separate from its director. Company money is not automatically yours, even where you own every share.
The boundaries blur quickly: you pay a supplier personally, the company pays your card, or you draw money before a dividend is declared.
HMRC’s current director’s loan guidance says a payment is normally a director’s loan where it is not salary, a dividend, an expense repayment or repayment of money you previously lent the company. The balance should appear in the company’s records and year-end accounts.
Do not guess.
Use the underlying transaction to decide the first classification.
Payment | Possible treatment | Evidence to check |
|---|---|---|
Monthly amount through payroll | Salary or bonus | Payroll record, payslip, PAYE and board approval |
Distribution to a shareholder | Dividend | Available profits, board minutes and dividend voucher |
Repayment of a business cost you paid | Expense reimbursement | Receipt, business purpose and proof you paid it |
Cash taken with no other valid treatment | Director’s loan | Bank entry, loan-account ledger and repayment terms |
Money you put into the company | Company owes you | Bank trail and director’s loan-account credit |
A bank reference such as “wages” is useful, not conclusive. The payroll, approval and accounting entry should tell the same story.
Common complications
Situation | Safer starting point |
|---|---|
You lent the company £20,000, then withdrew £12,000 | It may repay part of your credit balance, if the original loan and both transfers are supported |
One card payment mixes business and personal items | Split the transaction; do not force one label onto the whole payment |
Money was called a dividend after withdrawal | Check available profits and the decision made at the time; do not backdate records |
Two directors have opposite balances | HMRC’s July 2026 guidance does not permit one employee’s loan to be set against another person’s balance |
Dividends need profits and paperwork
Calling a withdrawal a dividend later does not make it one. A company may distribute only from profits available for that purpose, following the required process.
If the conditions were not met, the amount may require a different accounting treatment. In insolvency, an unaffordable dividend can become money repayable by the director. The Insolvency Service’s guidance explains this risk.
Expenses must belong to the business
A genuine reimbursement starts with a supported company cost. Personal expenditure paid by the company may be posted to your loan account, treated as earnings or have another tax consequence.
You can upload an Excel export, bank statement and invoices to Unwildered to organise transactions by date, amount and possible category. Caira can flag missing documents and inconsistent labels. Verify the proposed classification against the payroll, ledger, approvals and original evidence before changing any filing.
Three £10,000 rules? Not quite
Several rules use similar numbers, but they answer different questions. Under the Companies Act 2006, many loans to directors require member approval, subject to exceptions including qualifying small loans whose total does not exceed £10,000. Separately, tax rules can make an interest-free or cheap employment-related loan above £10,000 a taxable benefit.
There is also a narrower £15,000 exclusion from the close-company loan charge for certain full-time directors or employees without a material interest. The conditions matter.
Same subject. Different tests.
Build one clean account
For each movement, record the date, amount, accounts, proposed treatment, supporting document, accounting entry and status: supported, partly supported or unresolved.
The company must keep records explaining its transactions. GOV.UK guidance also stresses separating company and personal finances.
Unwildered can turn uploaded statements, invoices and spreadsheets into a first-pass chronology. It cannot decide that a dividend was lawful or make accounting entries for the company.
What to do next
Download the general ledger and director’s loan account. Compare them with both sides of every bank transfer, identify the precise errors and record the corrections required.
If there is a dispute or insolvency risk, keep neutral facts, disputed classifications and unsupported explanations separate in anything written.
Frequently asked questions
I used the company card for groceries by mistake. Is that criminal?
Not automatically. Record it promptly, repay it where appropriate and check the accounting, payroll and tax treatment. Concealment or dishonest records raise different issues.
Can I call an old withdrawal a dividend now?
Only if the requirements were satisfied. Check the available profits and original approval rather than backdating paperwork.
What if the company owes me more than I took?
Your account may be in credit overall, but each balance and any set-off need supporting records.
Can Caira fix my director’s loan account?
Caira can organise records and compare totals. Any correction still needs to match the source records, company approvals, accounts and required filings.
This article is general information, not legal, financial, tax or medical advice. Rules and outcomes depend on your facts, records and jurisdiction.
