What Are the Tax Responsibilities for Limited Companies?
Establishing a limited company can provide several great financial and legal benefits, including limitation of liability and tax efficiency potential. Additionally, there are specific tax obligations associated with establishing a limited company that business owners must understand and comply with; failing to do so may lead to penalties and loss of good standing with HMRC (or your local tax authority if you’re outside the UK). This blog will explain what are the tax responsibilities for limited companies, their deadlines, and how to stay compliant.
What Are The Tax Responsibilities For Limited Companies?
As a limited company, you must understand your key taxes to pay, as these are the Corporation Tax as well as Value Added Tax (VAT). If your company is dormant or non-trading, you still have to file dormant company accounts with Companies House. In this section, you will learn about the basic taxes you need to understand, along with their respective deadlines and filing requirements.
Corporation Tax
The company applies corporation tax to the profits it makes from conducting business, selling assets, or making investments.
- The current Corporation Tax rate in the UK (as of 2025) is 25% for companies with profits over £250,000.
- A low marginal rate of 19% is effective for firms with profits less than 50,000; there is marginal relief for those in between.
- Within 3 months after starting business activity, you should be registered for Corporation Tax with HMRC.
- You must calculate, report, and pay Corporation Tax.
Deadlines:
Tax Return (CT600): Within 12 months after your accounting period has ended.
Corporation Tax Payment: It is due 9 months and 1 day after the end of the accounting period.
PAYE (Pay As You Earn)
If you employ people (including yourself as a director drawing a salary), your company must register for PAYE. It is the mechanism for receiving income tax and National Insurance payments from the salary given to employees.
- Subtract the valid amounts of income tax and national insurance.
- Submit monthly Real Time Information (RTI) reports to HMRC.
- Pay these deductions to HMRC by the 22nd of each month (or the 19th if paying by post).
Value Added Tax (VAT)
You must register for VAT if your company’s taxable turnover exceeds the VAT threshold, which is £90,000 (as of 2025). You may also register voluntarily in case it is beneficial for your business.
- Charge VAT on your sales (output tax).
- Reclaim VAT on purchases (input tax).
- Submit quarterly VAT returns.
- Keep VAT records and give VAT invoices.
Dividends and Self-Assessment
If you are a director or shareholder receiving dividends from your firm, you will be required to take certain actions.
- Self-assessment tax return declaring those dividends.
- Pay the dividend tax based on the total income.
- Dividend Tax Rates (2025/26).
- Basic rate: 8.75%
- Higher rate: 33.75%
- Additional rate: 39.35%
- Everyone has a tax-free dividend allowance of £500 (2025/26).
or you visit Government website for further information.
Annual Accounts and Confirmation Statement
Although it is not technically tax-related, these filings are mandatory and connected to your tax matters.
Annual Accounts
- It should be sent to Companies House.
- This applies to the Corporation Tax calculations.
Confirmation Statement
- Confirms your company’s information (directors, registered address, etc.).
- It is required to be filed at Companies House every year.
Local Taxes Including Business Rates
If you run your company from commercial premises, you may also pay the business rates to the local authorities. The number depends on the property’s “rateable value”.
Record Keeping Requirements
HMRC requires that limited companies maintain accurate records for a minimum of 6 years, including the following examples:
- Sales and income
- Business expenses
- PAYE and VAT records
- Bank statements and invoices
- Digital and accessible records make it easier to file returns, and you are prepared for inspections.
Why Choose An Accountant For Tax Responsibilities For Limited Companies?
The time when it is crucial to understand what are the tax responsibilities for limited companies, the accountancy choice is very crucial. A well-informed, experienced accountant will ensure that your company adheres to all the rules of taxation, and he or she will provide you with advice about how you can wisely use your money. Preparing for your taxes ahead of time can afford you many advantages for your business. It can help you:
- Pay less tax by using legal savings and reliefs
- Follow all tax rules correctly
- Spot any deductions or tax credits you might be missing
- Organise your business in a way that keeps your tax bills as low as possible
- Good tax planning also helps you spot and resolve issues before they become a problem.
Conclusion
Managing a limited company provides greater control and potentially higher take-home pay, but it also comes with legal tax liabilities. Now it’s important to understand tax responsibilities for limited companies. If you stay informed and organised, you will complete your duties, avoid penalties, and focus on developing your company. For both small enterprises and those that are scaling up, understanding these duties is important because they are essential for financial health and the longevity of events.
Disclaimer: All the information provided in this article on “What are the tax responsibilities for limited companies?”, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.