HMRC is contacting directors over potentially undeclared released loans, with possible implications for both personal and company tax compliance.
The UK’s HMRC is contacting company directors who had loans released or written off between April 2019 and April 2023, where the amounts may not have been reported on their personal tax returns. These letters, while focused on individual tax issues, could lead to wider checks into the company’s overall tax compliance, including employment and corporate tax matters.
This announcement was made by the US’s HMRC on 24 June 2025.
Directors’ loans can trigger tax charges if interest is unpaid or below the official rate. If a loan is released, it may be taxed as earnings, with income tax and National Insurance due. For close companies, released loans to participators might be taxed as dividends instead. Companies may also face a section 455 tax charge if loans are not repaid on time, and they usually can’t claim a tax deduction on released amounts.
To manage risks, directors and companies should review any past loans, check if the right taxes have been paid, and confirm they have proper systems in place. If a director receives a letter from HMRC, it’s important to inform the company and consider responding together to avoid further issues.
