Limited Company Tax Responsibilities
Once you have set up your limited company there are some extra responsibilities you need to be aware of both legal and financial responsibilities. You are required to submit various forms to HMRC and Companies House and knowing when to file what can be a bit confusing.
At Saint, we like to keep everything simple and easy to understand so that’s exactly what we are going to do with this blog. Although we do recommend working with an accountant from the start if you haven't done so as of yet.
As a Company Director, you have several accounting related responsibilities and you have the ultimate responsibility to ensure that the tasks are carried out on time:
- To keep accurate records so accounts can be produced
- Submit accurate company accounts and file them on time to Companies House (9 months after your year end)
- Submit your corporation tax return (CT600) to HMRC and pay any tax liabilities (Tax return is due 12 months after your year end, payment of corporation tax is 9 months and 1 day after year end)
- If you employ staff, you have to submit PAYE returns and pay your staff correctly (including yourself). This includes income tax and national insurance.
- You must trade solvently (which means you have assets/cash in the company to pay any suppliers, subcontractors, employees, loans etc)
- Every year a confirmation statement must be filed to Companies House. It is a criminal offence to not file your Confirmation Statement on time (within 14 days of the date of the review date)
- A register of Persons with Significant Control must be produced and maintained (part of the confirmation statement process)
- If there are any changes in the business such as changes of directors, shareholders, address etc, you are required to notify Companies House.
- You must act in the interests of the company’s shareholders (which means the directors can not damage the company for their own benefit i.e. taking too much cash out of the business)
If you search for your company on the Companies House search, this will show your company’s due date for accounts, tax returns and confirmation statements.
If you employ staff in your company (typically for a limited company, you would pay yourself a small salary through PAYE) you will be required to submit a monthly PAYE submission every month (the submission and if any PAYE tax is liable, must be submitted and paid by the 22nd of each month.
A CIS tax month runs from the 6th to the 5th of each month. You are required to verify each subcontractor that works for your business and any CIS deducted needs to be reported and paid to HMRC by the 22nd of each tax month.
If you are registered for VAT you are required to file your VAT return and pay any VAT liability. Once you are registered for VAT, you are given your VAT quarters. At the end of every quarter, you have 1 month and 7 days to complete the VAT return and pay any VAT due to HMRC.
You are able to set up a VAT Direct Debit through your Government Gateway account which can take away some of the admin and pressure that comes with VAT.
As a director and shareholder of a limited company, you are likely to be taking a salary and a dividend. This dividend needs to be reported on your self-assessment. A self-assessment period is between the 6th of April to 5th of April which is called the tax year, a self-assessment is due by the 31st of January following the end of the tax year.
A dividend can only be issued if the company has ‘retained earnings’ available. Retained earnings are the available profit from the previous years of trading. If a company is in a loss making position with no retained earnings then they are not able to issue a dividend so this is something to be aware of.
Payment on Account
If your self-assessment tax is over £1000 outside of PAYE then HMRC will require Payments on Account to be paid. Payments on Accounts are paid on:
- 31st January - First payment on Account is paid
- 31st July - Second payment on Account
The Payment on Accounts is a payment towards your tax liability in advance. Any payments made are reduced from the tax liability calculated on the 31st of January resulting in either an extra charge for tax or a refund from HMRC.
A P60 is required to be produced at the end of a tax year for PAYE. It shows how much you have been paid, and how much tax and national insurance has been deducted. You will need to use the P60 for when you complete your self-assessment.
A P60 must be given to all employees by the 31st of May of each year.
A P11D summarises the value of any benefits and expenses provided to directors and employees in a tax year. If a P11D is required, you must provide a copy by the 6th of July following the end of the tax year.
If no benefits are given in the year then you are not required to file a P11D.
Frequently asked questions
This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
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