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Ward Williams Chartered Accountants
29/01/2024
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Self-Assessment Tax Returns (SATR) and Company Directors
Are you a director of a limited company?
If yes, you should check if you are required to register for Self-Assessment and if your personal tax return includes the relevant income from your company, along with other income you have received in the year.
Who should apply for Self-Assessment?
Company Directors are required to file Self-Assessment Tax Returns if the following apply:
- You received taxable income from your company and have not yet paid tax on it through your company’s PAYE (Pay As you Earn) scheme and you received other income such as bank interest, rental income, pension, taxable benefits.
- You received dividends of more than £500 (from 6 April 2024 or £1,000 from 6 April 2023) in addition to your directors’ salary and other income.
- You only receive a salary from your company between £6,396 and £100,000 and your income is taxed through the PAYE scheme.
- You only receive dividends from your company under £500 (for the 2024/25 tax year).
Director loan accounts
If you lend money to the company and your director’s loan is in credit, there is no tax or national insurance implications. However, if the company pays interest on the loan, the interest received will need to be included on your personal tax return.
If you have borrowed money from the company, this is considered a director’s loan. If this is not repaid within nine months of the end of the company’s accounting period and is tax free or has an interest rate below the current HMRC rate, the balance may be subject to income tax. Therefore, the outstanding amount will need to be declared on your personal tax return.
From a Corporation Tax perspective, if the company is a close company and the directors’ loan account is overdrawn at the year end, the loan must be included on the company tax return.
If the loan is repaid within nine months and one day from the year end, there is no Corporation Tax due. If not repaid, Corporation Tax at a rate of 19% or 25% is payable on the loan. This can be reclaimed when the loan is repaid, written off or released.
Dividend payments
If you receive dividends from the company of more than £500, you will need to declare this on your personal tax return. The dividend tax rate varies from 8.75% for a basic rate taxpayer, 33.75% for a higher-rate taxpayer or 39.35% for an additional rate taxpayer.
Taxable benefits
If the company pays for something you benefit from personally, such as a company car, gym membership, or medical/dental insurance, this will need to be included on the personal tax return as an employment benefit. These will also need to be reported on the company’s P11D each year.
When should you register by?
If you need to complete a personal tax return and have not submitted one before, you must register with HMRC by 5 October through the government website. For example, for the 2023/2024 tax year you must register by 5 October 2024 and the filing deadline will be 31 January 2025.
If you have any queries or would like to discuss this further, please contact Gursharan Sappal on 01932 830664 or email enquiries@wardwilliams.co.uk.
