Finance Guide for Limited Company Directors
What a new UK director actually needs to do — bookkeeping, payroll, dividends, Corporation Tax and the filings that cannot slip.
A limited company runs on three pillars: a clean bookkeeping file, an extraction strategy (small salary + dividends + employer pension) and a filings calendar (confirmation statement, accounts, Corporation Tax, VAT, PAYE). Get all three on day one and the rest is detail.
A director's legal duties
Under the Companies Act 2006 you have seven statutory duties — act within your powers, promote the success of the company, exercise independent judgement and reasonable care, avoid conflicts of interest, not accept third-party benefits, and declare interests in transactions. In practice, the most common breaches come from mixing personal and company finances and from missing filings. Build the habits below and you avoid 95% of problems.
The first 30 days
Day-one director checklist
0/8 · 0%The most-missed item is Corporation Tax registration. HMRC needs to know within three months of the company actively trading — not just being incorporated. Penalties for late registration are small but the precedent of missing a HMRC deadline is best avoided in month one.
Salary, dividends and pension
The standard UK director extraction strategy combines a small salary, dividends and pension contributions:
| Mechanism | 2024–25 sweet spot | Tax treatment |
|---|---|---|
| Salary | £9,100 (NI Secondary Threshold) | Deductible against CT; no employee NI |
| Dividends | Up to higher-rate band | 8.75% basic, 33.75% higher, 39.35% additional |
| Employer pension | Up to £60,000 annual allowance | Deductible against CT; no NI |
Above the higher-rate threshold, every extra £1 paid as a dividend costs around 51p in combined company and personal tax compared with the same £1 paid into a pension. Set the year's extraction strategy with your accountant in April and review at half-year.
Bookkeeping and VAT
Cloud bookkeeping (Xero, FreeAgent or QuickBooks) connected to your business bank account is no longer optional under Making Tax Digital. Reconcile weekly, not monthly — the longer transactions sit untagged, the more memory you lose and the more guesswork creeps in. Use Dext or Hubdoc to scan and attach receipts automatically.
VAT registration is mandatory once 12-month taxable turnover crosses £90,000. Once registered, you submit a VAT return every quarter and pay the net amount one month and seven days after the quarter end.
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Corporation Tax and key deadlines
Corporation Tax is 19% on profits up to £50,000, 25% above £250,000 and tapered "marginal relief" in between. It is payable nine months and one day after the end of the company's accounting period. The accounts themselves must be filed at Companies House within nine months, and the CT600 with HMRC within twelve months.
1) Confirmation statement — due 14 days after the anniversary of incorporation; £40 fee. Miss it and the company can be struck off. 2) Statutory accounts — due nine months after year-end; £150 minimum penalty rising quickly. 3) Corporation Tax payment — due nine months and one day after year-end; interest accrues from day one of lateness.
Director's loan account
Any money you draw from the company that isn't salary, dividend or expense reimbursement sits in your director's loan account. If you owe the company more than £10,000 at any point in the year, HMRC treats the benefit as taxable. If the account is overdrawn at the year-end and not repaid within nine months, the company pays an extra 33.75% tax (Section 455) — refunded when you repay, but it ties up cash for years. Keep the DLA in credit or reset it monthly.
The annual cycle
Build a single calendar with: monthly payroll runs and pension contributions; quarterly VAT returns; annual confirmation statement; year-end stock-take and accruals; annual accounts and CT600. An accountant manages most of this, but the director is legally responsible. Block 60 minutes on the first working day of each month to review management accounts and cash position.
Frequently asked questions
Related guides
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Information on this page is general guidance for UK small businesses and is not financial, tax or legal advice. Tax rules, allowances and product terms change. Always check current information with HMRC, Companies House or a qualified professional before making decisions.