Personal Requirements as a Director
*The following is a brief outline, please take advice from your Accountant on the most beneficial procedures for you personally*
As a director of a company you are employed by the company. This means you can take a salary which may be liable to income tax and national insurance contributions. You should receive a payslip each pay period and a P60 at the end of the PAYE financial year. This information should be kept safe as it will be required on your Self-Assessment tax return.
If you’re not already registered to receive a Self-Assessment return from the HMRC you should do so on becoming a director.
If you’re also a shareholder with your company, you will be able to receive dividends on your shares but only if the company is in profit. The amount of income you receive through dividends is declared on your Self-Assessment tax return and liable to income tax.
In addition to the above, as a company director, if you take money from the business over and above any money you’ve put in and it’s not classed as salary or dividends, the money is not yours. It belongs to the company and is considered a loan to you. It is recorded in your accounts as a Director’s Loan Account.
If you still owe money to the company 9 months after the end of the Corporation Tax period, the company must pay tax on it.
- As a director you are employed by your company.
- Any money taken out of the company by a director that is not salary or dividend is classed a loan to the director as it belongs to the company.
- Any income received by a director, other than salary, should be declared on a Self-Assessment Tax Return.
Apr 4, 2014