What Is a Director’s Loan Account in a Dental Practice?
A Director’s Loan Account (DLA) is the record of money that a dental practice owner (as company director) borrows from or lends to their limited company.
It tracks any non-salary, non-dividend, and non-expense payments between you and the practice.
For example:
- If you take money out of the company bank account that isn’t salary or dividend → it’s recorded as a loan to you.
- If you put personal funds into the practice to cover costs → it’s recorded as a loan from you.
Why Does a Director’s Loan Account Matter for Dental Practice Owners?
Dentists often blur personal and business money. Without tracking, this can create:
- Unexpected tax bills if you withdraw more than you’ve put in
- Cash flow confusion over what’s available for practice expenses
- Compliance risks with HMRC if the DLA is overdrawn
If your DLA is in debit (you owe the company money), HMRC can charge extra tax under Section 455 CTA 2010 until it’s repaid.
How Should Director’s Loans Be Managed in a Dental Practice?
Best practices include:
- Keep all withdrawals properly classified (salary, dividend, loan)
- Repay loans within 9 months of year-end to avoid extra Corporation Tax (currently 33.75% on overdrawn loans)
- Avoid using the DLA as a substitute for regular drawings planning
- Track both business → personal and personal → business movements clearly
How Does DentPulse Track a Director’s Loan Account?
| Feature | Function |
| Automated Classification | Separates salary, dividend, and loan withdrawals |
| Live DLA Balance | Shows real-time loan position to/from the practice |
| Tax Exposure Alerts | Flags Section 455 charges on overdrawn balances |
| Profit-to-Pocket™ Link | Ensures drawings are funded by actual profit, not accidental loans |
DentPulse prevents directors from drifting into overdrawn positions that trigger tax penalties or stress cash reserves.
DentPulse Tip™
“Think of your Director’s Loan Account as a running tab with HMRC watching over it.
Keep it clean, and you’ll sleep better at night.”
Related Glossary Terms
- Salary vs Dividend – tax-efficient ways to take money from the company
- Profit-to-Pocket™ – DentPulse model ensuring drawings align with profit
- Corporation Tax – business-level tax affecting DLA planning
- Cash Flow Management – keeping practice liquidity safe
Glossary Summary Table
| Term | Meaning |
| Director’s Loan Account | Record of non-salary/dividend transactions between director and company |
| Purpose | Tracks funds moved in/out to avoid tax penalties and confusion |
| DentPulse Advantage | Real-time balance, tax alerts, and safe drawings planning |
