As a limited company, you’re required to 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 benefits. 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. 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.
There are various forms and returns to take care of, which must be sent to both HMRC and Companies House. This is because, as a limited company director, you have a duty to keep both institutions informed of the state of your business.
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Accounting Reference Date and Accounting Period.
Both Companies House and HMRC set the due dates for filing in different ways.
Companies House gives your company an “Accounting Reference Date”; for all new companies, the first Accounting Reference Date is the last day of the month in which its first anniversary falls.
This means that the first set of Company Accounts you submit will often be longer than 12 months. For example, if your company formed on the 7th January 2018, your Accounting Reference Date would usually be 31st January 2019.
For your Company Tax Return and Corporation Tax, you’re given an “Accounting Period” by HMRC which begins when you start business activities 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.
Confirmation Statement (annual return)
Not to be confused with your annual accounts, the Confirmation Statement – formerly known as the annual return – 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 can file a statement at any time during the review period. 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 statement is 12 months. It may be shorter if you make an additional statement.
Our detailed look at confirmation statements contains everything you need to know: when you need to submit it, what needs to be included, and how it differs from the Annual Return, which it replaced in 2016.
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 within 9 months and one day after the end of the accounting period.
This is a return filed to HMRC once a year containing details of your company’s income, minus any tax allowances and expenses. The remaining figure – your profit – will then be used to calculate how much Corporation Tax your company owes.
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 only if you earn a salary over the Primary Threshold of £8,424 a year, which is £162 a week (based on 2018/19 figures). 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 Primary Threshold, you will have to pay both Employee’s NI. If you pay yourself (or any employees or other directors) over the Secondary Threshold (also set at £8,424 a year in 2018/19) then your company will have to pay Employer’s NI. Any NI you or your company owe will usually have to be paid on a monthly basis – assuming you run your payroll monthly. You can find out more about NI rates and thresholds in our tax rates and thresholds article.
The P60 is a summary of what salary you’ve paid yourself through your limited company, and the tax that’s been deducted from it in the previous tax year. It is important you keep your P60 for your records as you may need it for:
- completing a Self Assessment
- reclaiming overpaid Income Tax or National Insurance
- tax credits applications
- loan or mortgage applications
You must give your employees (including yourself or any other directors) a P60 by 31st May each year.
A P11D is a form required by HMRC that details any benefits and expenses that have been provided to directors and employees during the past tax year (6th April – 5th April). See our benefits in kind article for more info.
Details are required for all directors and employee’s, so even if your company only has one director (i.e. you), you still have to file a P11D. 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 each 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 is usually sent off to HMRC monthly.
Payment on Account
If you completed a Self Assessment for the previous tax year, and the amount of tax outstanding was more than £1,000 as at 31st January, then a Payment on Account is usually due to be paid by 31st July. Find out more about Payment on Account and why it catches people out. (Please speak to your accountant for bespoke advice).
The director of a limited company is legally required is legally required to submit an annual Self Assessment of their personal finances 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.
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 (6th April – 5th April) and we suggest you get it down sooner rather than later, as HMRC become virtually unreachable closer to the submission date. If you’re still not convinced you can check out our article for 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 footnotes.
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 charged, and then deduct the VAT they’ve been charged themselves during their business transactions. Most freelancers and contractors will be on the flat rate scheme with a limited cost trader VAT rate of 16.5%. There are other flat rate percentages depending on your company’s industry type; otherwise, the standard rate is 20%.
You must register for VAT if your annual turnover is in excess of £85,000 per annum (based on the 2018/19 figures). Remember this £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.
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 qualified accountancy advice. They’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, they’ll be able to do a lot of the work for you!
They can help you with things like estimating how much tax and NI you’ll need to pay every six months, or how much VAT you’ll pay each quarter. They’ll also help to ensure you’re not forgetting any payment on account, which catches many people out every year.
Find out more about our accounting for limited companies service.