Do limited company directors need to file a Self Assessment tax return?

Traditional employees have income tax deducted from their pay before they receive it.

The Self Assessment system collects income tax from people whose earnings haven’t been taxed at source.

This includes most limited company directors, because dividends and some other sources of income are not taxed through PAYE.

Who needs to submit a tax return?

At first, it can seem unclear who must file a Self Assessment Tax Return (SATR).

However, in practice, the rules are fairly straightforward.

Limited company directors

Most directors file a SATR to declare dividends, benefits in kind, and any other income not fully taxed at source. Dividend tax is not collected via PAYE, so you have to report and pay any tax you owe through Self Assessment.

There is no blanket rule that every director must file. If your only income is a PAYE salary from your company, HMRC does not usually require you to file a return.

This applies only if you have no dividends, no benefits in kind, and no other untaxed income.

In reality, this situation is rare. Most directors take at least some income as dividends, which brings them within the scope of Self Assessment.

You may also need to file if you receive significant benefits in kind, such as a company car or private medical cover.

The same applies if your total taxable income exceeds £100,000, as your Personal Allowance tapers away at that level.

If you are unsure, use the HMRC online tool or ask your accountant for confirmation.

Self-employed individuals

If you worked for yourself (as a sole trader – i.e. self-employed) during the 2025–26 tax year, you must register for Self Assessment.

The same rule applies if you received more than £2,500 in untaxed income, such as rent or tips. If you earned less than £2,500, check with HMRC to confirm your position.

Business partnerships must also file – both the partnership itself and each partner.

Other common triggers

Other situations that trigger the requirement to file a tax return include:

• Savings or investment income above £10,000, or dividends over £10,000.
• Capital gains above the Annual Exempt Amount (£3,000 for 2025–26). These must be reported and may be liable for Capital Gains Tax.
• Total taxable income above £100,000. At this level, the Personal Allowance is tapered, which increases your liability. You lose £1 of your £12,570 personal allowance for every £2 you earn above the threshold.

What are the deadlines?

You must meet several key deadlines to avoid a fine.

Understanding the tax year

The tax year runs from 6 April to the following 5 April. The current year began on 6 April 2025 and ends on 5 April 2026.

If you earn untaxed income in this period, you must settle your liability through Self Assessment.

The timing affects how you report income, claim reliefs, and plan strategies such as pension contributions or dividend declarations.

Key registration and filing dates

• Register by 5 October 2026 if you need to file a return.
• Paper returns must reach HMRC by 31 October 2026.
• Online returns must be submitted by 31 January 2027.
• 31 January 2027 is also the deadline to pay your bill in full.

You may also need to make a payment on account if your bill is over £1,000 and less than 80% of your tax is collected at source. See Payments on Account.

How to register for self assessment

You can register online through the Government Gateway. Before you can file, HMRC must issue you a Unique Taxpayer Reference (UTR). This can take up to two weeks, so do not leave registration until the last minute.

Once registered, set up two factor authentication for extra security on your HMRC account. If you do not already have a Government Gateway account, you must create one.

Submitting your return: HMRC or an accountant?

If your income is simple — salary plus dividends — you may be able to use HMRC’s online service.

If you have multiple sources of income, capital gains, or more complex affairs, an accountant can save you time and reduce errors.

Why professional help can be useful

Most limited company accountants will complete your personal tax return for a one-off fee, typically £100–£200 plus VAT.

This provides peace of mind that your figures are accurate and reduces the risk of HMRC challenging your return.

You cannot charge the cost of your personal return to your company, as it is not a business expense. Even so, using a qualified accountant often pays for itself.

They can make sure you claim every allowance and relief, such as pension contributions and charitable donations, through Gift Aid.

What is a Payment on Account?

A Payment on Account (POA) is an advance instalment towards your next year’s tax bill. You must make these payments unless:

• Your last Self Assessment bill was less than £1,000, or
• You paid more than 80% of your tax at source through PAYE or other deductions.

Each instalment equals 50% of your previous year’s liability. You pay in two parts:

• 31 January in the current tax year
• 31 July after the tax year ends

Example

If your 2024/25 bill was £2,000, HMRC will ask for two POAs of £1,000 each — one on 31 January 2026 and one on 31 July 2026. Suppose your final bill for 2025/26 comes to £2,500.

You have already paid £2,000, so you owe a balancing payment of £500 by 31 January 2027. At the same time, HMRC will request your first POA for 2026/27, equal to £1,250. The second instalment of £1,250 is due by 31 July 2027.

Note: POAs do not cover everything. Capital gains tax, student loan repayments, and the High Income Child Benefit Charge are added on top of your balancing payment.

Reducing Payments on Account

If you expect a lower income next year, you can apply to reduce your POAs.

You can do this by logging into your HMRC account or by sending form SA303. Estimate carefully — if you reduce too far and underpay, HMRC will charge interest on the shortfall.

Penalties for late filing or payment

If you file up to three months late, HMRC charges a £100 penalty. If you also owe tax, interest begins to accumulate. After six months, HMRC adds another £300 or 5% of the unpaid tax, whichever is higher. The longer the delay, the higher the penalties.

See the official penalties guidance for full details.

Keep your records organised

Keep all relevant paperwork in one place. That includes payslips, P60s, dividend vouchers, bank and investment statements, and records of any benefits. Good organisation makes filing much easier.

Cloud accounting tools such as FreeAgent and Xero can help. They allow you to log transactions, scan receipts, and track deadlines. In fact, it’s hard to remember what life was like before this software made life so much easier as a contractor!