If a director has borrowed money from the company — often through an overdrawn director's loan account — the accounts must say so. This note sets out each director's loan for the year in a table, with an optional sentence underneath describing the terms.
What this note shows
Companies Act 2006 s413 requires the notes to disclose advances and credits granted by the company to its directors. For each one the accounts show the amount, an indication of the interest rate, the main conditions, and any amounts repaid, written off or waived during the year. The disclosure applies whichever accounting framework you use, so it is required in FRS 102 Section 1A accounts even though most other notes are cut down for small companies.
Tax Optimiser prints the note as a table with these columns:
| Column | What it means |
|---|---|
| Director and terms | The director's name on one line and the terms (for example “Interest free, repayable on demand”) underneath. |
| Brought forward | The amount the director owed at the start of the period. |
| Advances in period | Money lent to, or withdrawn by, the director during the period. |
| Repaid in period | Amounts the director paid back on or before the period end date. |
| Carried forward | Brought forward + advances − repaid in the period. This should agree to the director's loan balance in debtors. |
If no director had a loan from the company at any point in the year, leave the note switched off, or switch on the additional note and use the No advances or credits template if you prefer to say so explicitly. In FRS 105 micro-entity accounts the same disclosure appears as a short text note instead — see Advances, credits and guarantees to directors (FRS 105).
Where the figures come from
The rows are the period's loans to participators. These are the same records as the Loan to Participators grid in the corporation tax computation, which produces the CT600A supplementary page. Adding a loan in either place adds it to both, and a change to the brought forward, advance or repayment figures in one shows in the other.
The carried forward figure in the note is worked out for the accounts, not taken from the tax grid:
- Carried forward = brought forward + advances in the period − repaid in the period.
- Repayments made after the year end do not reduce the accounts balance. At the balance sheet date the director still owed the money, so the debtor is still there. Those later repayments matter for tax: a repayment within nine months of the end of the accounting period can stop or relieve the s455 charge. That is handled in the CT600A grid; see Loans to participators and s455 (CT600A).
- If the period of account is longer than 12 months, it is split into two corporation tax periods. The note combines both: advances and repayments from the first and second CT periods are added together, so the table covers the whole period of account.
Loans are grouped by director. Where one director has more than one loan, each loan has its own line and the director gets a subtotal.
The trial balance is not used to build the table, so check that the carried forward total agrees to the “Directors loan accounts” balance in debtors. A difference usually means a loan is missing, or a repayment has been entered against the wrong date.
Completing the note in Tax Optimiser
- Open the period, choose View Accounts, then Notes in the Actions menu.
- Select Loans to directors and set Show this note in the accounts to Yes.
- Click Add Loan for each loan. Choose the director from the list (directors removed from the period are not offered), describe the terms, and enter the Brought forward balance, the Withdrawal (advances) and the amount Repaid by the period end date. The column headings show that date, for example “Withdrawal (31/03/2026)”.
- Use the bin icon to remove a loan. Removing it here also removes it from the CT600A loans grid, because they are the same record.
- Click Save changes.
The editor shows the columns for the first corporation tax period only. For a long period of account, enter the second period's advances and repayments in the Loan to Participators grid in the corporation tax computation; the note picks them up from there. The grid is also where you record repayments made within nine months of the year end, the repayment date and any release or write-off for s455 purposes.
Below the table there is a separate section, Additional note for Loans to directors, for a written description. Switch it on and use Use Template to describe the loan.
A director must be selected for every loan; saving without one shows the message “Please ensure a director is selected for the directors loan”. The note is for loans to directors. If the corporation tax grid also holds a loan to a shareholder who is not a director, check the printed note: a loan to a non-director shareholder is not a s413 disclosure, and it is normally described in the related party transactions note instead.
Wording templates
These templates are in the Additional note for Loans to directors section. The director's name and the period end date are filled in automatically; you are asked for the other values.
- Interest-free loan, outstanding at year end — an interest-free loan repayable on demand with a balance at the year end. Asks for {{LoanAmount}} and {{AmountOutstanding}}.
- Interest-free loan, repaid in year — an interest-free advance repaid in full before the year end. Asks for {{LoanAmount}}.
- Interest-bearing loan — a loan carrying interest. Asks for {{LoanAmount}}, {{InterestRate}}, {{InterestCharged}} and {{AmountOutstanding}}.
- Amount written off or waived — states an amount the company wrote off or waived. Asks for {{AmountWrittenOff}}.
- Loan from director — for money the company owes to a director. Asks for {{AmountOwed}}. This is not a s413 advance; consider putting it in the related party transactions note instead.
- No advances or credits — a nil statement.
Loans written off or waived
The table has no written-off column. The carried forward figure must still agree to the balance sheet, so enter the amount written off in the repaid column, and then use the Amount written off or waived template in the additional note to say how much of the reduction was a write-off rather than a repayment. s413 asks for amounts written off or waived to be disclosed, so do not leave the sentence out. A write-off also has corporation tax and personal tax consequences; record it in the corporation tax loans grid and see Loans to participators and s455.
How it appears in the accounts
The note prints as a table headed Brought forward, Advances in period, Repaid in period and Carried forward, with a total row. The additional note sentence follows the table.
In the demo the carried forward £11,000 is the same figure as other debtors on the balance sheet, which is what you want to see.
Frequently asked questions
Do small companies have to disclose loans to directors?
Yes. Companies Act 2006 s413 applies to small and micro-entity companies as well as larger ones. FRS 102 Section 1A accounts show it in this note; FRS 105 accounts show it in the advances, credits and guarantees note under the balance sheet.
Why doesn't a repayment made after the year end reduce the balance in the note?
The note reports the position at the balance sheet date, when the money was still owed. A repayment within nine months of the year end can still relieve the s455 tax charge on the corporation tax return, but it does not change the accounts. You can mention a significant repayment in the additional note or the events after the reporting date note.
Do I have to enter director's loans twice, once for the accounts and once for CT600A?
No. The loans to directors note and the CT600A loans grid use the same records. Enter a loan in either place and it appears in both.
How do I disclose a director's loan that was written off?
Include the amount in the repaid column so the carried forward agrees to the balance sheet, then add the “Amount written off or waived” template in the additional note so the write-off is disclosed separately.
What if the company owes money to the director rather than the other way round?
That is not an advance to a director, so it does not belong in the s413 table. Disclose it in the related party transactions note, for example with the “Loan from a director (interest-free)” template.