Paying yourself from a Limited Company

Setting up a Limited Company 

Step-by-step guide: setting up a limited company (Ltd by shares or Ltd by guarantee)
https://www.gov.uk/set-up-limited-company

If setting up a company Ltd by shares, it is also worth reading guidance on Shareholders Agreements.
before you register - especially if you are not the only shareholder.

Setting up a limited company and how to register for Corporation Tax
https://www.gov.uk/limited-company-formation/overview

You can learn more about your personal information and exactly what details are made public on the Companies House register here.


Verifying your identity for Companies House

Companies House is introducing a new identity verification process to help deter those wishing to use companies for illegal purposes.  Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity to prove they are who they claim to be. 

It is a legal requirement for authorised agents dealing with Companies House on your behalf.   
For directors and people of significant control, it is a voluntary process, but in time, it will be a legal requirement.  For guidance, visit here.

Running a limited company
For a full collection of helpful information and guidance on GOV around running a Ltd company visit here.

Company Addresses 
You must provide a registered office address when you set up a limited company. This is where all written communication must be sent.

If you choose to use a third party agent to handle your mail, they must send you all your company’s mail.

You may be breaking the law if you choose to receive only some of the mail sent to your company (for example, by using a service which stops junk mail).

The address must be:

• a physical address in the UK
• in the same country your company is registered in, for example, a company registered in Scotland must have a registered office address in Scotland

Your company address will be publicly available on the online register. 

Keeping your address private

If you do not want your address to be publicly available (for example, if it’s your home or someone else lives there) you can either:

• use a different address, such as the address of the person who will manage your Corporation Tax - you must get their permission first
• appoint an agent who will give you an address to use

You must have the address in place before you register your company.

Individuals in certain roles can apply to remove their home address from the companies house register here.

- company officer, person with significant control (PSC), subscriber or member of a company, LLP, or permanent representative of an overseas company).

You can now apply to suppress a home address where it has been used as a former registered office address, find out more here.

You can learn more about your personal information and exactly what details are made public on the Companies House register here.


Changing a company address

You can make a change to a companies registered address by using the (AD01 Form)

https://www.gov.uk/government/publications/change-a-registered-office-address-ad01

Companies house advise the change must be made within 14 days of the change taking place.

Commercial Mortgages

If you have purchased a premises for your Ltd Company using a commercial mortgage or loan, it is common for the lender to 'register a charge' on your records with Companies House.

This means that any lenders, such as a mortgage provider, who have security invested in your property because they have lent you money, have their interests documented on your Ltd Company listing.  It allows them to be recognised as a creditor if your company becomes insolvent in the future, or until the full amount of the loan/mortgage is paid off.

They are advised to register a charge within 21 days of the loan agreement being in place.  Any other person interested in the charge, such as a property agent or the company owners themselves, can also register their interest.

To read more about how this works visit: https://www.gov.uk/guidance/registering-a-charge-mortgage-for-a-company

Directors
Your company must have at least one director. Directors are legally responsible for running the company and making sure company accounts and reports are properly prepared.

A director must be 16 or over and not be disqualified from being a director.

Directors do not have to live in the UK but companies must have a UK-registered office address.

Directors’ names and personal information are publicly available from Companies House.

The director information hub from the Insolvency Service has some great resources on key topics and responsibilities for current and future directors.

Law Donut also has some great resources about business ownership and management, including guidance on administration, shareholders, and how to handle boardroom disputes.

Paying yourself through a limited company

We always suggest consulting an accountant to explore the most tax-efficient approach to paying yourself through a limited company.

ICAEW provides the Find a chartered accountant tool which helps business find an ICAEW member firm in their area. Some accountants may provide you with a free initial consultation to discuss your business needs.

To find a chartered accountant (enter your location and then filter the results using the specialisms tick box on the left-hand side of the screen).

Website: https://find.icaew.com/ 

Salary, expenses and benefits
If you want the company to pay you or anyone else a salary, expenses or benefits, you must register the company as an employer.

The company must take Income Tax and National Insurance contributions from your salary payments and pay these to HM Revenue and Customs (HMRC), along with employers’ National Insurance contributions.

If you or one of your employees make personal use of something that belongs to the business, you must report it as a benefit and pay any tax due.

There is more information on the employing staff factsheet.

Dividends
A dividend is a payment a company can make to shareholders if it has made a profit.

You cannot count dividends as business costs when you work out your Corporation Tax.

Your company must not pay out more in dividends than its available profits from current and previous financial years. You must usually pay dividends to all shareholders.

To pay a dividend, you must:
• hold a directors’ meeting to ‘declare’ the dividend.
• keep minutes of the meeting, even if you’re the only director

There is useful guidance about dividends on the Director Information Hub.

Tax on dividends

Your company does not need to pay tax on dividend payments.

But, shareholders may have to pay Income Tax on dividend payments they receive depending on how much they are. 

Shareholders get a dividend allowance each year and only pay tax on any dividend income above their  dividend allowance.

However, they do not pay tax on any dividend income that falls within their Personal Allowance.  

Working out Tax on dividends
How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.

Tax Band
Basic rate - 8.75%
Higher Rate - 33.75%
Additional Rate - 39.35%

To work out your tax band, add your total dividend income to your other income. You may pay tax at more than one rate.

Pay tax on up to £10,000 in dividends
Tell HMRC by:
• contacting the helpline
• asking HMRC to change your tax code - the tax will be taken from your wages or pension
• putting it in your Self Assessment tax return, if you already fill one in

Pay tax on over £10,000 in dividends
You’ll need to fill in a Self Assessment tax return.
If you do not usually send a tax return, you need to register by 5 October following the tax year you had the income.

A new Act became UK law in October 2023, allowing Companies House more power to prevent fraudulent and misused companies or partnerships being registered, and forcing the closure of existing ones.  It also makes it an offence to fail to prevent fraud.  The Act will affect company directors and people with significant control of these types of companies and partnerships:
- private limited companies 
- public limited companies (PLCs) 
- limited liability partnerships (LLPs) 
- limited partnerships (LPs) 
- community interest companies (CICs) 
- overseas companies 

You can read about the areas affected by the Act on the dedicated website here:
- identity checks on business owners for transparency of company ownership
- how you file your accounts and some paperwork e.g. Confirmation statements
- Prohibited company names
- abuse of personal information on the Companies House Register
- changes to Companies House fees from May 1st 2024

Companies House fees are set on a cost recovery basis. This means their fees must cover the cost of the services they deliver. They do not make a profit on their fees. 

Companies House have also published a series of factsheets about the Act overall.


The first set of changes

Companies House introduced the first set of three changes on 4th March 2024, which people registering or running a Ltd Company should familiarise themselves with:

Registered office addresses
Companies must have an ‘appropriate address’ where any documents sent there could be recorded by acknowledgement of delivery (e.g. signed for), and the person acting on behalf of the company would get to see any post arriving for them.  Companies will no longer be able to use a PO Box as a registered office address, and will need to change any existing one before the end of March 2025.  If Companies House identify a business without an appropriate registered office address, they could be struck off the register if they do not provide one with evidence of a connection to that address, within 28 days of being asked by Companies House.

Removing your address from the register
Individuals can now "protect" their usual residential address where it appears on the companies register in more cases than were possible before.  This includes cases in which a usual residential address is used as a
registered office address. This means the Registrar must not display the address publicly.  People can apply to remove their home address from the companies house register here:
https://www.gov.uk/government/publications/apply-to-remove-your-home-address-from-the-public-register-sr01

Registered email address
All companies need to supply a registered email address to Companies House when they incorporate (or their next confirmation statement if they are already registered).  Any company that does not do this will be committing an offence.  The email will not be published on the public register, it is for Companies House use.

Lawful purpose statements
Shareholders will need to declare the company’s intended future activities are lawful on their incorporation document and confirmation statement.  Companies House will not accept company documents if these statements have not been confirmed.

To read more about this set of changes visit here or watch their Webinar explaining the changes here


Increases to fees:

Companies House changed some of their fees on 1st May 2024.  The main ones for Ltd companies include:

Incorporation £50 - £78
Filing a Confirmation statement £34 - £62
Change of name £20 - £83
Voluntary strike off £33 - £44
Application to make an address unavailable for public inspection £30

There are also changes to fees for partnerships, overseas companies and community interest companies.

For a full list of all fees visit the campaign website

You can read a summary of all changes being implemented here.

Companies House have launched a service that allows third-party corporate service providers, such as accountants, legal professionals and company formation agents to apply to register as an Authorised Corporate Service Provider (ACSP). 

This is one of the changes being made under the Economic Crime and Corporate Transparency Act and means as this is implemented during 2025, third-party providers will have to register using this new service, to be allowed to file information and confirm that they have verified the identities of their clients. 

There are rules about who will be able to file accounts on behalf of a Ltd Company, and what requirements they need to meet. 

To read more and see a helpful video visit here.

Working in collaboration with the British Business Bank, Companies House has created articles to feature on two of their business guidance sites.

Find more about who Companies House are, how to file your annual accounts, and much more to help you understand your responsibilities as a company director in the small business owner’s guide to Companies House.

You can also find in-depth guidance on how to register a limited company with Companies House, including the different types of companies you can register and information on your legal responsibilities as a director.

If your business is classed as 'small' or 'micro', you might be able to send simpler (‘abridged’) accounts to Companies House and not need to be audited.  Most companies with a turnover of less than £10.2 million a year are classed as small, or micro if it is less than £632,000.  You can check where your company fits here.

We always suggest consulting an accountant for professional advice if you are unsure. 

Useful Contacts 

Corporation Tax: 0300 200 3410 also take Certificate of Residence application enquiries

Employer Helpline: 0300 200 3200 Can offer advice on stakeholder pensions, student loan repayments, Apprenticeship Levy, etc. CIS enquiries should still be directed through the dedicated CIS helpline above.

Employer PAYE and National Insurance - Payments: 0300 200 3401

Self Assessment Helpline (General Enquiries): 0300 200 3310 or you can use the Self Assessment Digital Assistant. If the digital assistant cannot help, there is the option to ask to transfer to a webchat with an HMRC adviser if there is anyone available.

Companies House is the government's registrar of companies in England and Wales for anyone looking to start a private limited company including Community Interest Companies.

Website: https://www.gov.uk/government/organisations/companies-house

List of services offered by Companies House: https://www.gov.uk/government/organisations/companies-house/about-our-services 

Contact details: https://www.gov.uk/government/organisations/companies-house/about/access-and-opening 

Tel: 0303 1234 500

Minicom or textphone: 029 2022 6788

E-mail: enquiries@companieshouse.gov.uk

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verifying your identity for companies house

Companies House is introducing a new identity verification process to help deter those wishing to use companies for illegal purposes.  

Under the Economic Crime and Corporate Transparency Act, anyone setting up, running, owning or controlling a company in the UK will need to verify their identity to prove they are who they claim to be. 

It is a legal requirement for authorised agents dealing with Companies House on your behalf.   

For directors and people of significant control, it is currently a voluntary process, but will become compulsory.  

People can use GOV.UK One Login to verify their identity directly with Companies House.

For guidance on identity verification, visit here.