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Directors Loan Account

Directors Loan Account

Published: 19/05/2020 By Jane Price

If a director of a company (or close family member), takes money from the company that is not salary, dividend or an expenses repayment it is very important to keep clear records of what money has been borrowed from or paid into the company.  These records are known as a Directors Loan Account or DLA.

An overdrawn DLA happens when a director takes out more money than they have put in.  These overdrawn amounts are recorded on the balance sheet as a company asset until it is fully re-paid.

If you are tempted to take a DLA to tide you over – beware!


If your company is struggling financially and you have an Overdrawn Directors Loan Account, this could become a personal issue for you.

Even if your company writes off your DLA.

If a company goes into liquidation, a liquidator would be appointed.  It would be the liquidators duty to raise as much money as possible, by liquidating the company assets, in order to pay back the company's debts.  If you have an overdrawn Directors Loan Account the liquidator would look for repayment.

Andrew Bailey, partner at turpin barker armstrong has recorded an informative video on Director Loan Accounts and has some tips you may find helpful.



What should I do if my company is struggling financially?


If your company is in financial distress and is found insolvent, you should seek professional guidance as soon as you can.  Situations like this could lead to your own bankruptcy if you cannot pay back your DLA.

turpin barker armstrong offer a one hour free consultation with no obligation.  We pride ourselves on giving clear professional advice.

Situations like this can be complex, so the sooner you get advice the better.

Call turpin barker armstrong today on 020 8661 7878 or fill out our contact form here

FREE consultation with no obligation to proceed.