Working through a Director's Loan Account in a full limited company scenario — with a real overdrawn balance, a Section 455 tax bill, and benefit in kind implications — is exactly what the Klein-Kuhic Scenario covers. Aidan Lusk is the sole director of Klein-Kuhic Ltd, a digital marketing consultancy, and has been drawing money from the business throughout the year without fully understanding the tax consequences. By the time the year ends, his Director's Loan Account is £32,400 overdrawn — triggering a Section 455 tax liability of £10,935 and a benefit in kind charge on top. Your job is to work out what's owed, explain it to Aidan in plain terms, and help him decide what to do.
More detail
The Klein-Kuhic Scenario covers the full DLA picture: identifying the overdrawn balance from the year's drawings, calculating the Section 455 exposure, understanding the benefit in kind on an interest-free loan, and advising on the difference between repaying before and after the due date.
The scenario also covers the payrolling of benefits — Aidan's gym membership and employee Sam Priestley's company car and private medical insurance all need to be handled correctly under the mandatory payrolling regime from April 2026.
Monika's feedback tells you exactly where your treatment was right, where it missed something, and what to tighten up before you're doing this for a real client.
Frequently asked questions
What is a Director's Loan Account and why does it matter?
A DLA records money that moves between a director and their company outside of salary and dividends. If it goes overdrawn — meaning the director owes the company money — there are tax consequences: Section 455 tax for the company and a potential benefit in kind charge for the director.
What is Section 455 tax?
Section 455 is a corporation tax charge that applies when a director's loan account is overdrawn at the company's year end and is not repaid within nine months. It's a temporary charge — if the director repays the loan, HMRC refunds it — but it creates a real cash flow pressure at the time. In Klein-Kuhic's case, the exposure is £10,935.
Does the scenario cover repayment planning? Yes — you'll advise Aidan on the difference between repaying before 1 January 2027 (no charge due) and repaying after (charge paid but refunded nine months later). That distinction is exactly the kind of advice a real client needs to hear before they make a decision.
Get started
Work through the Klein-Kuhic Scenario and take your first call with Aidan. He understands his business but not the numbers — your job is to explain it clearly and help him take action.