Running a limited company in the UK can offer financial and operational flexibility, but it also comes with tax and compliance responsibilities. Whether you’re a new director or looking to stay updated on changes for the 2025-26 tax year, here’s what you need to know.
Company Tax Responsibilities
Corporation Tax
All companies must register for Corporation Tax with HMRC when they start trading.
Corporation Tax rates for 2025-26:
19% for profits below £50,000.
25% for profits above £250,000.
Marginal relief applies for profits between £50,000 and £250,000.
A Company Tax Return (CT600) must be filed annually.
Tax payment deadline: 9 months and 1 day after the end of the company’s accounting period.
VAT (if applicable)
If your annual turnover exceeds £90,000 (threshold for 2025-26), VAT registration is mandatory.
You can voluntarily register for VAT if turnover is lower.
VAT returns are usually submitted quarterly, and payments made on time however there are various VAT schemes and care should betaken to ensure you register for the most appropriate scheme.
PAYE & National Insurance Contributions (NICs)
If you pay yourself or staff a salary, you must register as an employer and operate PAYE.
You must deduct Income Tax and NICs from wages and submit Real-Time Information (RTI) reports to HMRC.
For 2025-26:
Personal Allowance: £12,570 (no Income Tax below this threshold).
Primary NIC threshold: £9,500 (for employees, including directors on payroll).
Employment Allowance & Employer's NICs
Employment Allowance allows eligible employers to reduce their annual Employer's NICs bill by up to £10,500.
To qualify, your Employer's NIC liability must be less than £100,000 in the previous tax year.
Other eligibility criteria must also be considered.
Employer’s NICs apply on salaries above the secondary NIC threshold (£5,000 for 2025-26), at a rate of 15%.
These thresholds are based on the rules in England different PAYE rules apply in other parts of the UK.
Director's Personal Tax Responsibilities
Self-Assessment Tax Return
As a director, you must file a Self-Assessment tax return annually if you:
Take dividends from the company.
Earn additional income outside of PAYE.
The deadline for online filing is 31 January 2026 for the 2024-25 tax year.
Dividends and Income Tax
Dividend Allowance for 2025-26: £500 (reduced from previous years).
Dividend tax rates:
8.75% (basic rate, income up to £50,270).
33.75% (higher rate, income between £50,270 and £125,140).
39.35% (additional rate, income over £125,140).
Many directors opt for a tax-efficient mix of salary and dividends to reduce tax liability.
National Insurance Contributions (NICs)
No NICs are due on dividends.
NICs apply if your salary exceeds £9,500.
Compliance Responsibilities
Companies House Filing
You must file the following annually:
Confirmation Statement (to update company details).
Annual Accounts (simplified micro-entity accounts under FRS 105).
Company Tax Return (CT600) for HMRC.
Accounting Records
Maintain financial records for at least 6 years.
Keep records of invoices, receipts, bank statements, payroll, and VAT returns.
Statutory Accounts (Micro-Entities)
Micro-entity accounts require a simplified Balance Sheet.
No Profit & Loss account disclosure is required publicly.
Closing or Dormant Company
Inform HMRC and Companies House if you stop trading.
You can either dissolve the company or make it dormant.
Employer Obligations (If Hiring Staff)
Provide employment contracts.
Deduct PAYE & NICs from employees’ wages.
Auto-enrol staff in a workplace pension if they meet eligibility criteria.
Other Considerations for Directors
IR35 Rules
If you provide services to a client through your company, ensure you comply with IR35 rules to avoid being taxed as an employee.
Business Expenses
Track allowable expenses (e.g., travel, home office, equipment) to reduce taxable profits.
Personal expenses cannot be claimed through the company.
Key Deadlines for 2025-26
Obligation | Deadline | |
|---|---|---|
Self-Assessment Tax Return | 31 January 2026 | |
Corporation Tax Payment | 9 months + 1 day after year-end | |
Company Tax Return (CT600) | 12 months after year end | |
Confirmation Statement | Annually (within 14 days of due date) | |
VAT Returns | Usually quarterly (if registered) but check with HMRC | |
PAYE & NICs (if applicable) | Monthly | |
Statutory Accounts Filing | 9 months after year end |