Directors Tax Returns

Directors must report benefits in kind received from their company on their Self Assessment tax return. Common benefits include company cars, private medical insurance, interest-free or low-interest loans, living accommodation, and expenses payments. These are also reported by the employer on form P11D. The taxable value of benefits is added to your income and taxed accordingly.

A PSC (Persons with Significant Control) register records individuals who own or control more than 25% of shares or voting rights in a company, or who otherwise exercise significant influence or control. All UK limited companies and LLPs must maintain a PSC register and file this information with Companies House. Failure to comply is a criminal offence.

Dividends are taxed at lower rates than salary: 8.75% for basic rate taxpayers, 33.75% for higher rate, and 39.35% for additional rate. The first £500 of dividends each year is tax-free (the dividend allowance). Many directors take a combination of salary and dividends to optimise their tax position, but this should be planned carefully with professional advice.

Company directors are required to complete a Self Assessment tax return each year, regardless of whether they have additional income beyond their salary. This is because directors often receive dividends, benefits in kind, or other income that is not fully taxed through PAYE. Filing accurately ensures you pay the correct amount of tax and avoid penalties.