A director’s loan, or current account, with his or her company represents from the company’s viewpoint transactions between the company and the director. It is like a bank account in that it can be in credit (‘cr’ or what the company owes to the director) or in debit (‘dr’ or what the director owes to the company). Similarly there might be an agreement to pay interest, in either direction, depending on whether the account is in credit or overdrawn. Unlike a bank account however, the value of items other than cash can be debited or credited. For example, the account might reflect
If an asset is transferred, the value shown is that placed on it by the company and is not necessarily the open market value at the date of transfer. The company should always have a record of the transactions with its directors. The balance at the end of the company’s accounts year will be shown in the balance sheet to the statutory accounts. The balance might be either specifically identified or be part of other creditor or debtor balances. The following is a simple summarised example of a loan account, for a company with a 31 January accounts year-end:
| Date | £(DR) | £(CR) | Comment |
| 1/2/99 |
| 60000 | Credit Balance owed by company to director at 31/1/99 |
| Various Dates |
| 3000 | Business expenses paid by director |
| 10/2/99 | 6000 |
| Cash withdrawn |
| 28/2/99 |
| 5000 | Value of car transferred to company |
| 28/2//99–31/1/00 | 48000 |
| Monthly cash withdrawals of £4000 |
| 19/9/00 |
| 12000 | Interim dividend for y/e 31/1/00 |
| Various dates | 15000 |
| Personal expenses on company credit card |
| 31/1/00 |
| 85000 | Remuneration voted for y/e 31/1/00 |
| 31/1/00 | 96000 |
| Credit Balance at 31/1/00 |
