Directors' Loan Account Guide

What a directors' loan credit is, how it can arise, and how Kumberi models repayments — with links to official HMRC material.

What Is A Directors' Loan Account?

A directors' loan account (DLA) records money moving between a limited company and its director that is neither salary nor a dividend. When the company owes the director, the DLA is in credit — the company is a debtor and the director holds a receivable.

The opposite case — an overdrawn DLA where the director owes the company — can trigger Corporation Tax charges (often discussed as section 455) and other reporting. Kumberi's scenario model focuses on credit balances: money the company still owes back to the director.

Educational overview only — not personal tax, accounting, or financial advice. Rules depend on your company, accounts, and timing. Speak with a qualified adviser for your circumstances.

How A Credit Balance Can Arise

Opening Balance

An amount already owed to the director at the start of the scenario (for example from prior personal funding recorded in the company's books).

Personal Funds On Company Purchases

When personal money pays for a company purchase (for example an Ltd property or vehicle), the model can record a DLA credit for that funding — the company owes that money back.

Repayments from company cash are modelled as a return of that capital, not as salary or dividend income in the year-loop. Affordability is limited by company cash and the drawdown settings you enter.

What Kumberi Shows

Opening credit, credits from modelled purchases, annual repayments, and remaining balance year by year
Links between purchase events and the DLA credit they created, where the simulation records that connection
How remaining credit interacts with household net worth and retirement DLA policy settings in your scenario

Figures are simulation output from the inputs and timeline you provide — not bank or Companies House data, and not a recommendation to use a DLA.

Official Guidance And Further Reading

HMRC — Directors' loans
GOV.UK overview of money owed either way between company and director, record-keeping, and related tax topics.
HMRC Company Taxation Manual — Close companies (CTM61500+)
Technical manual material on close companies and loans to participators (useful context; dense reading).
Kumberi calculation methodology
How the wider simulation assembles cash, tax, and scenario outputs.

Overdrawn directors' loans and section 455 Corporation Tax are outside the credit-DLA view in scenarios. See HMRC guidance on directors' loans if that situation applies to you.

Related tools: Journeys (Business → Director Loan Account) and Benefit-in-Kind guide for company car tax context.