As a limited company owner or director, in addition to meeting your company’s tax obligations, you may also need to register for and pay self-assessment tax on your income. Getting on top of your self-assessment tax obligations is essential to ensure that your personal tax liabilities are reported accurately to HMRC and by the deadline required. In this guide we will provide an overview of self-assessment tax for limited company owners and directors, including how to register for self assessment and file a personal tax return.
What is self assessment in the UK?
Self assessment is one of two ways in which HM Revenue and Customs (HMRC) collects personal income tax from individuals in the UK. The other is Pay As You Earn (PAYE). Self assessment differs from PAYE because the latter is managed on behalf of employees by employers who take the responsibility of ensuring that the income tax is deducted “at source” and paid to HMRC. With self assessment this process is the direct responsibility of the employee.
Most company directors pay themselves a relatively small salary under the personal tax allowance (£12,570 for the 2023/24 tax year). This ensures that they can continue to qualify for a state pension. Many company directors then top up their salaries with company dividends, which are taxed at a lower rate.
Who should register for self assessed tax?
Self assessment is used by those with more complex tax affairs, including business owners. You will need to register with HMRC for self assessment if you are:
- Self-employed as a sole trader and have earned more than £1,000 p.a. (before taking off anything on which you may claim tax relief).
- A partner in a business partnership.
- An employee with a total taxable income of more than £100,000 in a financial year.
- A company director.
- A company shareholder.
Do I need to register for self assessed tax as a company director?
If you are a company director or shareholder then, in most cases, you will need to register with HMRC for self assessment if you have received an income from the company and not paid tax at source. Whether you must register will depend on how you receive money from your business and how much.
Firstly, if you receive only a salary from your company, and this is between £6,396 (the lower earnings limit for Class 1 National Insurance) and £100,000, then you may not need to register for self assessment. This includes your income from your salary, pension, taxable benefits (e.g. company car), property or investments. Instead, your company can pay your income tax on your behalf through the PAYE scheme.
Secondly, if you receive income only in the form of dividends from your company of under £1,000 (which is the dividend allowance for the tax year 2023/24) then you will not need to register for self assessment. If your total dividends for the tax year exceed this amount, on the other hand, then you will need to register and file a return for self-assessment. It is important to note, however, that if you receive both a salary and dividends from the company then you will almost certainly need to register for self-assessment.
Thirdly, if you have received money in the form of a director’s loan from your company then you will need to register for self assessment if it has not been repaid within the timescale required. Specifically, if the loan is not repaid within 9 months from the end of the company’s financial year then tax must be paid on the amount borrowed and declared through a self assessment tax return.
Finally, if you register a new company that has remained dormant since incorporation then you will not need to register for self-assessment because you are receiving no money from the business. You may need to register for self assessment, however, after the business has become active.
Using HMRC’s self assessment checking service
If you are still unsure whether you must submit a self assessment tax return as a company director then we recommend that you use HMRC’s online “Check if you need to send a Self Assessment tax return” service.
You will be asked a series of questions, including whether you worked for yourself in the tax year, whether you were a director of a company in this period, your level of income and details of any other forms of income. You can also ask an accountant who can confirm whether you must register for self assessment based on your individual circumstances.
How do I register for self assessment?
You can register for the self assessment using HMRC’s online platform as follows:
- Sign in to the Government Gateway – If you have no Government Gateway user ID and password for your personal tax then you can create a new one*.
- Complete and submit Form SA1 – You will need to enter the following details:
- Full name.
- Postal address (this can be outside the UK).
- Date of birth.
- Daytime telephone number.
- UK National Insurance number.
- Why you need to register for Self Assessment.
Once you have submitted your self-assessment application online, HMRC will send you a Unique Tax Reference (UTR) by post or e-mail within 15 to 21 working days. HMRC will then write to you by post or e-mail to ask you to submit a self-assessment tax return and give you a deadline for doing so. If you need your UTR more quickly then you may be able to access this by using the HMRC App or your personal tax account.
The rules state that you must register for self assessment by 5th October if you are doing so for the first time. There may be a penalty for missing this deadline.
* To register to use the Government Gateway for the first time you will need some further information, including:
- Your National Insurance number or postcode and two of the following:
- A valid UK passport.
- A UK photocard-type driving licence issued by the DVLA.
- Either a payslip that you have received within the last three months . . . or a P60 for the last tax year.
- Details of a tax credit claim if, if you made one.
- Details from a Self Assessment tax return, if you have made one.
- Information held on your credit record, if you have one (e.g. loans, credit cards or mortgages).
Self assessment tax return deadlines
If, as a company director or owner, you fall within the requirements to register for self-assessment and submit a return then it is essential that you do so within the timescale required by HMRC. The key deadlines for the tax year are as follows:
- 5th April – tax year ends.
- 5th October – deadline for self assessment registration.
- 31st October – deadline for submission of a paper self assessment tax return.
- 31st January (following year) – deadline for submission of an online self-assessed tax return.
- 31st January (following year) – deadline for the payment of any self-assessed tax that you owe.
It is important to remember that, if you miss any of the self assessment deadlines above, then you may be liable to pay a financial penalty of £100 if your tax return is up to 3 months late.
What are the income tax rates for 2024/25?
The current income tax rates are as follows:
| Band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
How do I file a self-assessed tax return?
Those who are registered for self assessment are required to prepare and submit a self-assessed tax return every year. As with the self assessment registration process, you can also submit your self-assessed tax return online. Your accountant will normally handle this process on your behalf. To file a self assessment tax return the following steps must be completed:
- Gather the necessary records and details that you will need to register, including your Government Gateway ID and password and your national insurance number.
- Sign in to the Government Gateway.
- Once you have signed in, enter your personal details including your unique tax reference (UTR), NI number, ‘phone number, address, e-mail address, date of birth and marital status.
- Answer the questions to tailor your self-assessed return.
- Once you have answered all of the questions, view your calculation to see whether you owe any self-assessed tax and, if so, then how much
- Save and submit your self assessment tax return. HMRC will then confirm receipt of your return.
Once you have logged into the online self assessment platform, you can review any previous submissions and tax calculations at any time through the HMRC’s online tax portal.
Final words
If you are a company director or owner then, when it comes to the matter of self-assessed tax, it is imperative that you engage an accountant whom you can trust to handle the process for you. Your accountant will ensure that your self assessment tax return is prepared correctly and submitted to HMRC on time. Most importantly, with an expert accountant handling your personal taxes you can focus on what you do best: Running your company and making it a success.
