Limited Company | Accountant in Milton Keynes

Everything you need to run a UK Limited Company correctly, from incorporation to annual compliance

Written by the team at Leader Accountancy, an AAT Licensed Accountancy practice (Licence No. 1008787) based in Milton Keynes, serving clients across the UK. Updated July 2026.

A Limited Company is a legally separate entity from you — which is exactly why it needs a different rulebook to a sole trader business. This guide covers formation, Corporation Tax, how to take money out through dividends and director’s salary, and the two annual filings every company must get right: the Confirmation Statement and the Accounts.

⚠️ Important note
This guide is for general information only. Tax rules change with each government Budget, and personal circumstances vary. Speak to a qualified accountant before making decisions — Leader Accountancy can help with a personalised consultation.

1. Forming a Limited Company

Incorporating creates a company as a distinct legal “person” — with its own assets, liabilities and tax obligations, separate from you personally.

Formation steps

1. Register with Companies House — company name, registered office address, at least one director and one shareholder
2. Receive your company registration number and Corporation Tax UTR
3. Register for Corporation Tax with HMRC within 3 months of starting to trade
4. Open a business bank account in the company’s name (not your personal account)
5. Set up bookkeeping and, if applicable, payroll and VAT registration

Leader Accountancy’s Company Formation service handles this whole process.

⚠️ Common mistake
Using a personal bank account to receive company income, or paying personal bills directly from the company account, is one of the most common — and riskiest — mistakes new directors make. It muddies the bookkeeping and can create serious tax problems.

2. Corporation Tax

Corporation Tax is charged on the company’s taxable profit (income minus allowable expenses), normally due 9 months and 1 day after the end of the accounting period.

Obligation	Deadline
Corporation Tax payment	9 months and 1 day after the end of the accounting period
Company Tax Return (CT600)	12 months after the end of the accounting period
Confirmation Statement	Annually, on the anniversary of incorporation
Annual Accounts (Companies House)	9 months after the end of the accounting period (private companies)

💡 Practical example
If your company’s accounting period ends 31 March 2026, Corporation Tax is due by 1 January 2027, and the CT600 return by 31 March 2027 — but your annual accounts at Companies House are due earlier, by 31 December 2026.

3. Taking money out: salary, dividends and expense reimbursement

Director’s salary

Paid through PAYE payroll, subject to Income Tax and National Insurance. Many directors set a modest salary — enough to count as a qualifying year for the State Pension — and top up income with dividends.

Dividends

Dividends can only be paid from profit remaining after Corporation Tax — never from gross revenue. They’re taxed separately from salary (Dividend Tax), with their own annual allowance and different rate bands.

⚠️ Common mistake
Declaring dividends without sufficient available profit (“illegal dividends”) can create serious accounting and tax problems, including reclassification of the amount withdrawn. Always confirm distributable profit before declaring a dividend.

Expense reimbursement

Genuine business expenses (travel, equipment, a proportion of home office costs) can be reimbursed to the director without generating additional tax, provided they’re properly documented.

4. Director’s Loan Account: the trap to watch for

The Director’s Loan Account (DLA) records any money a director takes from the company that isn’t salary, a formally declared dividend, or a legitimate expense reimbursement — effectively, the company “lending” money to the director.

• If the DLA is overdrawn (you owe the company money) at the year end and isn’t repaid within 9 months, the company may have to pay an additional tax charge under Section 455
• Loans above a certain amount can also create a taxable benefit in kind for the director if interest isn’t charged appropriately

⚠️ Common mistake
Treating the Director’s Loan Account as an informal personal current account is one of the most common causes of tax problems for company directors — especially when the overdrawn balance builds up year after year without being resolved.

5. Annual filings: Confirmation Statement and Accounts

Every Limited Company must file two separate annual submissions with Companies House, distinct from HMRC’s Corporation Tax return:

• Confirmation Statement: confirms company details (directors, shareholders, registered office, share structure) are up to date — due annually, even if nothing has changed
• Annual Accounts: the company’s financial statements, filed with Companies House and separately submitted (as part of the CT600) to HMRC

Missing either deadline can result in automatic late filing penalties from Companies House, escalating the longer the delay continues.

6. VAT, payroll and Making Tax Digital

• VAT: compulsory once taxable turnover exceeds the registration threshold; voluntary registration can make sense earlier in some cases. See our VAT services
• Payroll: required if the company has employees (including a director drawing a salary), operated through HMRC’s Real Time Information (RTI) system
• Making Tax Digital: requires digital record-keeping and compatible software, phased in by tax type and turnover

7. The director’s personal Self Assessment

Even as a company owner, directors normally still need to file a personal Self Assessment return, declaring salary, dividends received and any other personal income.

Frequently Asked Questions

Is it better to be a sole trader or a Limited Company?

It depends on profit level, sector, and growth plans. Limited Companies tend to become more tax-efficient above a certain profit threshold, but bring more compliance obligations. It’s worth modelling both scenarios with an accountant.

Can I use company money for personal expenses?

Not directly. Any withdrawal must be formalised as salary, dividend, or expense reimbursement — otherwise it becomes a Director’s Loan, with possible tax implications.

What happens if I declare dividends without enough profit?

This can be treated as an “illegal dividend”, risking accounting and tax reclassification of the amount withdrawn, with possible complications for directors.

Are the Confirmation Statement and Annual Accounts the same thing?

No — the Confirmation Statement confirms company details are current, while Annual Accounts are the company’s financial statements. Both are separate annual obligations at Companies House.

Limited Company director’s checklist

• Do you have a separate business bank account?
• Do you know your accounting period end date?
• Do you confirm available profit before declaring dividends?
• Are you tracking your Director’s Loan Account balance?
• Have you checked whether you need to register for VAT?
• Do you file both your Confirmation Statement and Accounts on time?

Running a Limited Company and want to be sure it’s structured as efficiently as possible?

Leader Accountancy handles Corporation Tax, dividend planning and annual filings for company directors across the UK.Book a consultationFree 15-minute chat