Am I Personally Liable for My Limited Company’s Debts?
Directors are not normally personally responsible for limited company debts, but guarantees, money owed to the company and misconduct can change the position.
Published by Vanguard Insolvency · General guidance
Company debt and personal debt are different
A limited company’s debts belong to the company. Being a director does not, by itself, make every unpaid supplier, tax bill or company loan your personal debt. The starting point is to identify who borrowed the money or entered the agreement and whether there is a separate personal obligation.
This protection has limits. You may have signed a personal guarantee, borrowed from the company or taken decisions that require closer investigation. An adviser needs the documents and transaction history to assess your position. Do not assume either that all debts transfer to you or that limited liability protects you in every situation.
Check personal guarantees carefully
A personal guarantee is a separate, legally binding commitment relating to a company obligation. Lenders, landlords or suppliers may have requested one. The wording matters: identify the parties, the debt covered, any limit, security and the events that allow a demand to be made.
Keep the guarantee, the underlying agreement and any demand together. Where several people have signed, ask a solicitor to explain each person’s exposure. Company closure does not automatically settle a separate guarantee, and an informal understanding with another director is not a substitute for reviewing the signed terms.
Review the director’s loan account
A director’s loan account records money moving between a director and the company. If it is overdrawn, the director may owe money to the company. If the company owes the director, the position is different. Ask the accountant for a reconciled balance and supporting entries rather than relying on an old set of accounts.
Identify drawings, expenses, salary, dividends and repayments accurately. There may be tax implications, and not every payment labelled as a dividend or expense will have been treated correctly. Do not attempt to remove an overdrawn balance through backdated paperwork or an unsupported accounting entry; obtain advice on the actual transactions.
What to do before making decisions
Misconduct and certain statutory provisions can also create personal exposure. The Insolvency Service identifies circumstances including wrongful trading, fraudulent trading and misfeasance. HMRC can issue joint and several liability notices in specified circumstances. These are case-specific matters, not an automatic consequence of every business failure.
Before repaying yourself, transferring assets, giving a new guarantee or taking further credit, raise the company’s financial difficulties with an appropriate professional. Preserve records of the figures considered and the decisions taken. Advice about the company and independent advice about your own position may both be needed.
Our company director support page explains how personal concerns fit alongside the business review. If you are based locally, visit our Leeds advice page. Include any demand or deadline in your enquiry, and avoid posting personal financial documents in a public message.
Start with the facts
Prepare these details for a useful first conversation.
- Signed guarantees and any demands
- Reconciled director’s loan account
- Recent accounts and bank statements
- Details of security and urgent deadlines
Questions about your options
No. Liability depends on the particular obligation, guarantee, transactions and any applicable statutory grounds.
A personal guarantee or other personal liability can expose personal assets. Whether a particular property is at risk requires individual legal advice.
Record the balance and supporting transactions. Do not assume that repaying yourself ahead of other creditors is appropriate when the company is in financial difficulty. Obtain advice first.
Related support
Company director advice
Discuss guarantees, duties and the personal position alongside company debts.
Company rescue and restructuring
Assess the company’s trading position and possible recovery routes.
Sources checked 4 November 2026
- Insolvency Service: company and personal debts
- Insolvency Service: personal guarantees
- Insolvency Service: director’s loans
- Insolvency Service: directors’ duties
General information for companies in England and Wales. Individual circumstances and deadlines require professional advice.
Talk through your next step
Tell us what is happening. We will help you understand the information needed to assess your options.