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.
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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Here’s a timeline based on forming a company on the 1st January 2018 that will give you an idea of what you need to file and when.
Accounting Reference Date and Accounting Period
Filing dates may differ depending on the day your company was first set up. The above timeline is accurate for a company that was formed on 1st January 2018, and shows the major deadlines for filings and payments. 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.
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
The director of a limited company is legally required to carry out a Self Assessment of their personal finances once a year.
The return is due by 31st January each year. However, you can usually file as soon as you have your P60 from the previous tax year, 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 client, we can file your return for you for a small one-off fee.
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
A P11D is a form required by HMRC that details any benefits and expenses that have been claimed 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 provides to any director or employee, you either have a file a nil P11D or tell HMRC one isn’t needed.
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.
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.
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.
Details about your company finances must be made public in accordance with the Companies Act 2006. You must file a set of abbreviated accounts to Companies House every year, which means the company’s Statement of Financial Position and its footnotes.
Your first set of abbreviated accounts are due nine months after your first company year end.
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.
National Insurance (NI) will need to be paid only if you earn a salary of over £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 do end up above this threshold, NI will usually have to be paid on a monthly basis – assuming you run your payroll monthly.
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.
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.