Can directors be personally liable for company debts?

In most cases, company debts remain the responsibility of the limited company, not its directors. However, there are several circumstances where directors may become personally liable. Personal guarantees are one common example; if directors have guaranteed loans, leases, or overdrafts, they must repay these personally if the company fails. Directors can also face liability if they engage in wrongful trading, fraudulent trading, or misfeasance, which involves breaching fiduciary duties. In addition, if directors have an overdrawn loan account with the company at the point of liquidation, they may be required to repay it. HMRC may also take action against directors for deliberate tax avoidance or non-payment of PAYE and VAT. While limited liability is designed to protect directors, it is not absolute. The best protection is to act responsibly, keep accurate records, and seek insolvency advice early if financial difficulties arise.