What is a Directors’ Loan Account?
A directors’ loan account (DLA) is a notional balance owed between directors and the company. It is used to record money injected into and taken from a business by the directors.
DLAs are perfectly legal and there are no issues taking one out (although it needs to be approved by shareholders if it is over £10,000). However, it needs to be repaid or offset within nine months of your company’s financial year end, or it is seen to be overdue and judged as an interest-free loan from the business, with tax implications.