What I Wish I Knew Earlier
The tax, compliance and money lessons that catch out most new UK company directors — so you don't have to learn them the expensive way.
Most new company directors don't learn these lessons in a meeting — they learn them from a surprise tax bill, a missed deadline or an awkward letter from HMRC. None of them are complicated; you just have to know they exist. Here are the ones we wish every new director was told on day one.
1. Pay yourself at least a small salary
If you take everything as dividends and no salary, you waste your £12,570 personal allowance. A small director's salary up to the secondary threshold creates a tax-deductible expense for the company — leaving that allowance unused effectively costs the company around £2,500 in extra corporation tax each year. We set this up automatically for clients on our payroll service and factor in Employers' NI.
2. VAT thresholds apply to turnover, not profit
You must register for VAT once your rolling 12-month turnover goes over £90,000 — even if you're making no profit. Miss it and HMRC will backdate the registration and charge the VAT out of your pocket. Read our full VAT threshold guide and see how our VAT returns service keeps you on the right side of it.
3. Use a registered office service
The address you give Companies House is published on the public register — forever. If that's your home address, anyone can look it up. A registered office service keeps your home private and gives HMRC and Companies House a reliable place to send post. See the difference between registered, trading and service addresses.
4. Set aside tax money from day one
The simplest way to avoid a surprise tax bill: split every payment that comes in. A sensible starting point is 25% for corporation tax, 20% for VAT (if registered), plus a buffer for personal dividend tax. Hold it in a separate savings pot and you'll never be caught short. Our tax service gives you the exact figures each quarter so you know what to set aside.
5. Corporation tax is due before your accounts are
Corporation tax is payable 9 months and 1 day after your year end, but the accounts and CT600 aren't due at Companies House until 9 months and at HMRC until 12 months after year end. So you pay first, file second — which catches a lot of new directors out. Our year-end accounts process gives you the number in plenty of time.
6. Most directors still need a Self Assessment
Even if your only income is salary and dividends, HMRC normally expects directors to file a personal Self Assessment tax return. Dividends are taxed personally on top of your salary, and the tax isn't taken at source — so you'll owe HMRC by 31 January each year.
7. Dividends can only come from post-tax profit
You can only declare a dividend if the company has enough retained profit — after corporation tax — to cover it. Pulling money out as a "dividend" when there's no profit creates an unlawful dividend, which becomes a director's loan and can land you with personal tax charges. Always paper it properly with a board minute and a dividend voucher.
8. Watch your Director's Loan Account
If you owe the company money at year end, you'll be hit with s455 tax at 33.75% on the balance (refunded later when you repay it), plus a benefit-in-kind charge if the loan is over £10,000. Our full Director's Loan guide explains how to avoid the trap.
9. The Confirmation Statement is separate from accounts
Every UK company must file a Confirmation Statement at Companies House at least once a year (£34 fee) — confirming directors, shareholders and PSCs are correct. It's separate from your accounts and missing it can lead to your company being struck off.
10. Companies House identity verification is now mandatory
Every director and PSC must now verify their identity with Companies House. Get your personal Companies House code sorted early — see our full PSC verification guide.
11. Keep your authentication and tax codes safe
You'll collect a stack of references in your first year — UTR, PAYE reference, VAT number, Companies House auth code, personal verification code. Store them somewhere secure (our clients keep them in their portal). Lost your UTR or auth code? See how to request a new one.
12. Open a proper business bank account
A limited company is a separate legal entity — its money is not your money. Mixing personal and business spending creates a mess at year end and can blur the legal separation that protects you. Open a dedicated business account from day one.
13. Pick cloud bookkeeping software early
Spreadsheets won't survive Making Tax Digital. We recommend Xero or FreeAgent — both pull bank transactions automatically and keep your VAT, expenses and invoicing in one place. Start with our cloud bookkeeping overview and the Xero getting-started guide.
14. Employment Allowance can wipe out Employers' NI
Eligible employers can claim up to £10,500 of Employment Allowance against their Employers' NI bill — but single-director companies do not qualify. Read the rules in our Employment Allowance guide.
15. Pension duties start with your first employee
As soon as you employ someone (other than just yourself), you have auto-enrolment duties with The Pensions Regulator. Setting up a Nest workplace pension is the easiest route. Don't forget the payroll onboarding steps either.
16. Expenses must be 'wholly and exclusively' for the business
Not everything you spend through the company is allowable. Client entertaining, normal clothing, and the commute from home to your usual workplace are all disallowed. Putting them through anyway just inflates your director's loan and creates tax problems later.
17. Keep records for at least 6 years
HMRC requires limited companies to keep accounting records for 6 years from the end of the accounting period. Digital copies in Xero or FreeAgent satisfy this — no shoebox of receipts required.
18. Get the insurance you actually need
Employers' Liability is a legal requirement the moment you have staff (minimum £5m cover). Depending on your work, also consider Professional Indemnity, Public Liability and Cyber cover. It's far cheaper to have it and never claim than to find out you needed it.
19. Director responsibilities are personal
Under the Companies Act, directors have personal legal duties — to act in the company's best interests, keep proper records, file on time and avoid wrongful trading. Fines for late filings and serious breaches fall on you, not the company. The good news: with the right processes, none of it is hard to get right.
20. Get an accountant before you need one
The cheapest mistakes are the ones you never make. An accountant from day one sets up your salary/dividend mix, VAT, payroll and bookkeeping correctly — usually saving more in tax than they cost in fees. See our business pricing or get in touch.
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Common Questions
Should a new director take a salary or just dividends?
In most cases, a small salary up to the secondary NI threshold plus dividends is the most tax-efficient combination. The salary is a tax-deductible expense for the company and uses your personal allowance; the dividends sit on top at the dividend tax rates. We model the exact split for every client.
When do I have to register for VAT?
You must register when your rolling 12-month taxable turnover exceeds £90,000, or if you expect to exceed it in the next 30 days. You can also register voluntarily, which is sometimes beneficial if your customers are VAT registered.
When is corporation tax actually due?
Corporation tax is due 9 months and 1 day after your accounting year end — before the accounts and CT600 themselves are due to be filed. Setting aside roughly 25% of profits as you go avoids any nasty surprises.
Do I need a Self Assessment if I'm a director?
Usually yes. Dividends aren't taxed at source, so HMRC expects directors taking dividends to file a personal Self Assessment and settle the tax by 31 January each year.
Can I use my home address as the registered office?
You can, but it will be published permanently on Companies House. Most directors prefer a registered office service to keep their home address off the public record and avoid receiving statutory post at home.
How long do I need to keep company records?
Limited company records must be kept for at least 6 years from the end of the accounting period. Digital copies stored in Xero, FreeAgent or another MTD-compliant system are fully acceptable.