As a limited company director you have certain legal responsibilities. Specifically, you must submit (‘file’) various forms and returns to both Companies House and HMRC. Knowing what to file (and when) can get a bit confusing. At Crunch, we love to be helpful so we’ve pulled it all together into a simple easy-to-read article.
Choosing to run your business as a limited company gives you many advantages. It’s usually the most efficient way to run a business in terms of taxes, and limited liability means that your home and personal possessions won’t be on the line should business take a turn for the worse.
The downside is that it’s a greater administrative responsibility than operating as a sole trader or an employee. We’ve got an article on the main differences between a sole trader and limited company that can help you choose what’s right for you.
If you’re wanting to get your company started we’ve got a great article about how to set up a limited company.
Who can be a director of a limited company?
There are no formal qualifications or special skills that are required to become a company director. Actually, there are very few restrictions at all. A director must be at least 16 years old, have no history of bankruptcy and can’t be prohibited (disqualified) by a court order from being a company director. In special circumstances, a court can allow a previously bankrupt or disqualified person to become a director.
While there is no mandatory qualification, a director must be able to perform the duties shown below.
What are my duties and responsibilities as a limited company director?
On becoming a director you are entrusted with the legal responsibility of running a company. Even as the founder of the company, you’re bound by a statutory code of practice and have certain legal obligations.
By forming a limited company you are establishing it as a separate legal entity to yourself. It has its own legal framework and accountabilities, and any profits losses incurred belong to the company. So, when you’re managing the company you need to treat it as a separate entity. Even if you’re the sole director and sole shareholder, you must always act on behalf of the company.
As a director, you must make decisions for the benefit of the company and not yourself. This may seem confusing if you are the sole shareholder, employee, and director, but a decision that may benefit you personally may adversely affect the company’s performance.
What do I need to file and when as a limited company director?
There are various forms and returns to take care of, which must be sent to HMRC and Companies House as required. This is because, as a limited company director, you have a duty to keep both institutions informed about your business as shown below.
Accounting Reference Date and Accounting Periods for filing information.
Companies House and HMRC set the dates for filing information in different ways.
Companies House gives your company an “Accounting Reference Date” when it is first incorporated. The first Accounting Reference Date is the last day of the month in which the first anniversary of incorporation falls.
This means that the Accounting Reference Date for the first set of Company Accounts you file will often have a period longer than 12 months. For example, if your company incorporated on the 7th January 2023, your Accounting Reference Date would usually be 31st January 2024.
For your Company Tax Return and payment of Corporation Tax, you’re given an “Accounting Period” by HMRC which begins when you start trading and usually ends on your Accounting Reference Date.
What you have to file as a limited company director
The following list shows the major deadlines for filings and payments. Filing dates may vary depending on the day your company was first set up. Depending on your individual circumstances you may have additional reporting and payment deadlines, such as Construction Industry Scheme, Employment Related Securities Return, Employment Intermediary Reporting. Please speak to an accountant such as Crunch for bespoke advice.
Not to be confused with your annual accounts, the Confirmation Statement is, in fact, a completely separate filing requirement.
Whereas your annual accounts contain mainly financial information, your Confirmation Statement provides information about your company, its directors, and other administrative arrangements. It also contains information about ‘Persons of Significant Control’ involved with your business.
You must file a Confirmation Statement at least once per year. You can file more than one in a 12-month period if information about your company has changed.
It’s a criminal offence not to file your statement within 14 days of the end of the ‘review’ period. For new companies, the review period starts on the date of incorporation and ends 12 months later. The maximum period that can be covered by a Confirmation Statement is 12 months.
Our detailed look at Confirmation Statements contains everything you need to know: when you need to submit it and what needs to be included.
Corporation Tax Payment
If your company made a profit in the accounting period, then you will likely need to pay Corporation Tax to HMRC. Any Corporation Tax due must be paid by nine months and one day after the end of the Accounting Period.
Form CT600 is a return filed with HMRC once a year containing details about your company’s income, minus any tax allowances and business expenses. The remaining amount – your taxable profit – will then be used to calculate how much Corporation Tax your company must pay.
Your first Corporation Tax return is due 12 months after your first year end, and then each year within 12 months of your Accounting Period end.
National Insurance (NI) will need to be paid if you earn a salary over the Primary Threshold of £12,570 a year, which is £1,048 per month or £242 a week. These figures are from the 6 April 2023 to the 5th April 2024 tax year.
The advantage of running a limited company with a service like Crunch is that we ensure you pay yourself in the most tax-efficient way possible – via a combination of dividends and salary – so that you don’t overstep the NI threshold.
If you pay yourself above the NI Primary Threshold, you will have to pay Employee’s NI. If you pay yourself (or any employees or other directors) over the Secondary Threshold which is set at £9,100 a year for the 2023/24 tax year (£758 per month, or £175 per week) then your company will have to pay Employer’s NI.
NI you or your company owe will usually have to be paid on a monthly basis – assuming you run your company payroll monthly. You can find out more about NI rates and thresholds in our tax rates and thresholds article.
Form P60 shows a summary of the amount of salary you’ve been paid through your limited company, and the tax that’s been deducted from your pay in the tax year. It is important you keep your Form P60 safe as you may need it for:
- completing a Self Assessment
- reclaiming overpaid Income Tax or National Insurance
- tax credits application
- loan or mortgage applications
You must give your employees (including yourself or any other directors) their Form P60 by 31st May each year.
Details are required for all directors and employees, so even if your company only has one director (i.e. you), you still have to file a Form P11D with HMRC and keep a personal copy for your own records. If no benefits are provided to any director or employee, you either have to file a nil P11D or tell HMRC one isn’t needed.
Directors and employees must receive a copy of their P11D before 6th July following the end of the relevant tax year.
When you’re the director of a limited company, you’ll probably want to pay yourself a salary via a PAYE scheme since you’re also an employee of the company. PAYE information is usually submitted to HMRC monthly.
Payment on Account
If you owe any personal tax, HMRC requires you to make the following payments on account each year:
- First payment on account by midnight on 31st January
- Second payment on account by midnight on 31st July.
If you completed a Self Assessment for the previous tax year, and the amount of tax outstanding was more than £1,000, you pay that amount and a contribution towards the new tax year based on an HMRC estimate.
A second payment for the new tax year is then due on 31st July, again based on an HMRC estimate. Find out more about a Payment on Account and why it catches people out. (Please speak to your accountant for bespoke advice).
The director of a limited company must submit an annual Self Assessment of their personal income and allowances to HMRC. The Self Assessment (also known as a personal tax return) must include details about all of your income from employment, dividends paid to you by your company and other sources such as rental income or sole trader income. You can claim allowances for items such as personal pension contributions.
The return is due by 31st January each year. However, you can usually file as soon as you have your P60 from the relevant tax year and we suggest you complete your return sooner rather than later, as HMRC becomes virtually unreachable closer to the submission date.
If you’re still not convinced you can check out our article “seven reasons why you should file your Self Assessment early”.
If you’re a Crunch client, we can file your return for you for a small one-off fee.
Statutory Accounts (also known as Year-end Accounts)
Details about your company finances must be made public in accordance with the Companies Act 2006 and accounting standards. You must submit a set of accounts to Companies House every year (at the end of your accounting period), which includes the company’s Income Statement, Statement of Financial Position and other information in accounting notes.
A company’s first accounting period is by default set to finish the last day of the month one year after incorporation. Your first set of accounts are normally due nine months after your first company year end (or within 21 months of the company’s incorporation date if the company’s first accounting period is longer than 12 months).
The deadline for submitting year-end accounts to Companies House is calculated to the exact day.
At the end of every quarter, or in some cases annually, a VAT registered business or limited company must add up all the VAT they’ve added to sales, and then deduct the VAT they’ve paid on business expenses. Most freelancers and contractors will be on a VAT flat rate scheme with a limited cost trader rate of 16.5%.
There are other flat rate percentages depending on your company’s industry type. The standard rate of VAT is 20%.
Since April 2019 you need to keep your VAT records digitally and submit them using Making Tax Digital (MTD) compatible software. We’ve written an article with more information on MTD and how it might affect you.
You must register for VAT if your annual turnover is in excess of £85,000 per annum (for the 2023/24 tax year). Remember the £85,000 limit is on a rolling 12-months basis, so if you think you are getting close to this turnover you should think about registering early so you don’t face a fine.
We’ve written a handy article that explains more about VAT, the different types of VAT Scheme and when you need to register.
Important Rates and Dates Calendar
Here’s a timeline based on forming a company on the 1st January that will give you an idea of what you need to file and when.
Get an accountant to help you
Well, we would say this, but it doesn’t make it any less true! When running a limited company, it’s always best to seek specialist advice from an accountant such as Crunch.
We’ll remind you of important tax dates and payments due, show you ways of keeping your accounts in excellent shape, advise you on allowable expenses and how to report them so you’re as tax efficient as possible. Even better, we’ll be able to do a lot of the work for you!
We can help you with things like estimating how much tax and NI you’ll need to pay every year, or how much VAT you’ll pay each quarter.
Find out more about our accounting for limited companies service.