Free Director's Loan Agreement Template

DIRECTORS' LOAN AGREEMENT

Companies Act 2006 (S.197–s.214)  ·  Corporation Tax Act 2010 (S.455)  ·  2026-04-15

This Directors' Loan Agreement is entered into as of 2026-04-15 between Sterling Technologies Ltd (Company No. 09876543) ("Company") and James Alexander Mitchell, Managing Director ("Director").

The Company and the Director have agreed that the Company shall make a loan to the Director on the terms and conditions set out in this Agreement.

The board of directors approved this loan by resolution dated 1 March 2026.

In this Agreement, unless the context otherwise requires:

"Borrower" means James Alexander Mitchell.
"Lender" means Sterling Technologies Ltd.
"Loan" means the principal sum of £25,000.00 advanced by the Lender to the Borrower under this Agreement.
"Loan Date" means 2026-04-15.
"Repayment Date" means 2027-04-15.
"Companies Act" means the Companies Act 2006.
"CTA 2010" means the Corporation Tax Act 2010.
"ITEPA 2003" means the Income Tax (Earnings and Pensions) Act 2003.

The Lender agrees to lend to the Borrower, and the Borrower agrees to borrow from the Lender, the sum of £25,000.00 (the "Loan"), to be advanced on or before 2026-04-15.

Purpose: The Loan shall be used for the following purpose: Deposit for residential property purchase. The Borrower shall not use the Loan for any other purpose without the prior written consent of the Lender.

Interest shall accrue on the outstanding balance of the Loan at the rate of 3.75% per annum, calculated on a daily basis and compounded annually.

Interest shall accrue from the Loan Date and shall be payable on the Repayment Date together with the principal.

In the event of late payment, interest shall continue to accrue on any overdue amount at the rate specified above plus 4% per annum until payment is received in full.

The Borrower shall repay the Loan in full, together with any accrued interest, on or before 2027-04-15.

If the Borrower fails to make payment on the due date, the Lender may demand immediate repayment of the entire outstanding balance.

Section 455 Corporation Tax Act 2010: The Director acknowledges that if the Loan (or any part thereof) remains outstanding at the end of the Company's accounting period, the Company shall be liable to pay corporation tax on the outstanding balance at the rate of 35.75% under s.455 CTA 2010 (the rate applicable to a loan with this Loan Date — 33.75% for loans advanced before 6 April 2026, increased to 35.75% for loans advanced on or after that date by the November 2025 Budget, in line with the dividend upper-rate increase). This tax is repayable by HMRC to the Company when the Loan is repaid by the Director, subject to the relief provisions of s.458 CTA 2010.

The Director agrees to use reasonable endeavours to repay the Loan within nine months and one day of the Company's accounting reference date in order to avoid the imposition of s.455 tax.

Beneficial Loan Interest: The parties acknowledge that if the Loan is interest-free or carries interest below the HMRC Official Rate of Interest (currently 3.75% per annum — 3.75% for tax years 2025/26 and 2026/27, reviewed quarterly by HMRC on 6 April, 6 July, 6 October and 6 January since April 2025), the difference between the interest charged and the interest at the HMRC Official Rate of Interest constitutes a taxable benefit in kind under Part 3 Chapter 7 ITEPA 2003 and the Income Tax (Benefits and Expenses) Regulations, where the aggregate value of qualifying loans exceeds £10,000 at any point in the tax year.

P11D Reporting: The Company shall report the benefit of the Loan on the Director's P11D form for each tax year in which the Loan is outstanding (using either the "averaging" or "precise" method of calculation under ITEPA 2003). The Company shall be liable to pay Class 1A National Insurance contributions on the reported benefit at the prevailing rate.

Forward-looking: The parties note the HMRC consultation "Reporting company payments to participators — modernising the reporting framework" (19 March – 10 June 2026), which proposes mandatory close-company reporting of all transactions with participators (recipient, amount and date) in addition to existing RTI reporting, with implementation anticipated from tax year 2027/28. The Company shall comply with any such requirements once enacted.

Shareholder Approval (ss.197-200 CA 2006): The parties confirm that the Company's members have approved this loan by ordinary resolution, as required under section 197 of the Companies Act 2006 (loans to directors exceeding £10,000) and, where applicable, section 200 (loans to persons connected with directors, threshold £50,000). A memorandum setting out the matters listed in section 197(4) has been made available to members at the Company's registered office for the prescribed period (or, in the case of a written resolution, sent with the resolution). A copy of the resolution is retained in the Company's statutory records. The parties acknowledge the civil consequences of contravention under section 213 CA 2006 (transaction voidable; directors liable to account and indemnify) and the criminal penalty under section 197(2) where applicable.

Board Resolution: The board of directors has passed a resolution authorising the entry into this Agreement, dated 1 March 2026.

The Loan is unsecured. No security or collateral is required by the Lender.

The Borrower may repay all or part of the Loan at any time before the Repayment Date without penalty or premium. Any partial repayment shall be applied first to accrued interest and then to the principal.

The Director and the Company warrant that, as at the date of this Agreement: (a) each of the Company's directors and registrable Persons with Significant Control ("PSCs") has had their identity verified with Companies House (whether directly or via an Authorised Corporate Service Provider) under sections 1110A to 1110F of the Companies Act 2006 as inserted by section 62 of the Economic Crime and Corporate Transparency Act 2023; (b) the identity verification regime commenced on 18 November 2025 (voluntary phase from 8 April 2025) and the 12-month transition for existing directors and PSCs concludes in mid-November 2026 — the Company warrants compliance with the timetable applicable to it; (c) any change in director or PSC required to be registered at Companies House in connection with or following this Agreement shall be filed only by an IDV-verified officer, employee or Authorised Corporate Service Provider (ACSP). A material misstatement under this clause (i) is treated as a material breach of this Agreement, (ii) may constitute an offence under section 1112 Companies Act 2006 (false statement to the registrar) and (iii) may amount to a "relevant offence" for the purposes of section 199 ECCTA 2023.

Each party warrants that, where the Company constitutes a "large organisation" within the meaning of section 199 of the Economic Crime and Corporate Transparency Act 2023 (meeting at least two of: ≥250 employees, >£36m turnover, >£18m balance sheet), it maintains reasonable fraud-prevention procedures as required by that section (in force 1 September 2025) and that neither it nor, to its knowledge, any "associated person" within the meaning of s.199 has committed a "relevant offence" in connection with this Agreement, the Loan or its application. Each party shall promptly notify the other if it becomes aware of any actual or suspected fraud connected with the Loan or its purpose. The Director acknowledges that procuring, or knowingly benefiting from, a "relevant offence" committed by an associated person of the Company is itself a basis for liability under s.199 and that this Agreement does not, and is not intended to, give effect to any such arrangement.

The Company shall process the Director's personal data — including name, residential and service address, National Insurance number, signature, share certificate and PSC records, loan-account ledger entries, and any biometric or identity-verification data collected to meet ECCTA 2023 obligations — only for the purposes of (a) maintaining the register of members and PSC register under Companies Act 2006 Parts 8 and 21A; (b) discharging statutory filing duties at Companies House and HMRC (including P11D, Class 1A NIC, RTI and any participator-reporting regime when implemented); (c) administering this Agreement and any repayments, notices, set-off and security; and (d) any other purpose required by law. The Company is the data controller in respect of such data and shall comply with the Data Protection Act 2018 as amended by the Data (Use and Access) Act 2025 (Commencement No. 6 Regulations SI 2026/82, in force 5 February 2026), the UK GDPR and any applicable ICO codes of practice. The Director retains the right of access under Article 15 UK GDPR to the personal data the Company holds about them, the right of rectification under Article 16 and the right of erasure under Article 17 (subject to the Company's overriding statutory retention duties under the Companies Act 2006 and tax legislation). Personal data not subject to a continuing statutory retention duty shall be deleted or anonymised within 6 years of full repayment of the Loan (aligned with the Limitation Act 1980 s.5 simple-contract limitation period), save where a longer period is required by law or for the establishment, exercise or defence of legal claims.

Governing Law: This Agreement and any dispute or claim arising out of or in connection with it shall be governed by and construed in accordance with the laws of England and Wales.

Jurisdiction: Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement.

Entire Agreement: This Agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, representations, warranties, and understandings between them, whether written or oral, relating to its subject matter.

Variation: No variation of this Agreement shall be effective unless it is in writing and signed by both parties.

Confidentiality: Each party shall keep the terms of this Agreement confidential and shall not disclose them to any third party (other than their professional advisers, or as required by law, regulation, or any governmental or regulatory authority) without the prior written consent of the other party.

Notices: Any notice under this Agreement shall be in writing and shall be delivered personally, sent by pre-paid first-class post, or sent by email to the address of the relevant party set out in this Agreement or such other address as that party may notify in writing.

Severability: If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not be affected.

Third-Party Rights: This Agreement does not confer any rights on any person or party (other than the parties to this Agreement and, where applicable, their successors and permitted assigns) pursuant to the Contracts (Rights of Third Parties) Act 1999.

Insolvency and Preferences: The parties acknowledge the potential application of sections 238-239 of the Insolvency Act 1986 (transactions at an undervalue and preferences) and the associated two-year look-back period for connected-person transactions under section 240(1)(a), and confirm that this Agreement is entered into in good faith on arm's-length terms for the benefit of the Company.

Limitation: The Lender acknowledges the limitation periods in the Limitation Act 1980 — six years for simple contract actions (section 5) and twelve years where the Agreement is executed as a deed (section 8).

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.