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Your first year as a limited company director: a tax checklist

Limited companies

Your first year as a limited company director: a tax checklist

Setting up a limited company is quick, but the first year involves several registrations and decisions that affect your tax for years.

SRBy Stephen ReynoldUpdated 11 November 20263 min read
New limited company director setting up tax
In 30 seconds
  • Register for Corporation Tax within 3 months of trading
  • Set up payroll for director salary
  • First accounts due within 21 months
  • Keep a director’s loan account from day one

Getting your payroll, bank account, VAT and record-keeping right from day one avoids penalties and wasted tax.

This checklist walks new directors through the first year.

Setting up

  • Verify your identity with Companies House
  • Open a business bank account
  • Register for Corporation Tax within three months of starting to trade
  • Choose an accounting reference date that suits you
  • Register for PAYE if you’ll pay a salary
  • Consider VAT registration
  • Set up accounting software

Paying yourself

Most directors take a salary through payroll and dividends from profits. For a sole director with no other employees, a salary of £12,570 is common for 2026/27, or £5,000 to avoid employer NI if the Employment Allowance isn’t available. See our salary vs dividends guide.

Corporation tax calculator

Your first-year bill.

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For example

Raj incorporates on 10 May 2026 and starts trading straight away. His first accounts run to 31 May 2027 and must be filed by 10 February 2028, the 21-month deadline. Because that period is longer than 12 months, there are two Corporation Tax periods: 10 May 2026 to 9 May 2027, and 10 May to 31 May 2027, each with its own CT600.

Records

  • Keep company and personal spending separate
  • Record director loans in both directions
  • Minute dividends and keep vouchers
  • Keep receipts and mileage logs

Fixed-fee accountancy support

Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.

Get a fixed-fee quoteCall 0161 531 4179

Your personal tax return

Directors receiving dividends over £10,000, or with other untaxed income, need a Self Assessment return. See Self Assessment for directors.

Common first-year traps

  • Taking dividends without enough profit
  • Missing the Corporation Tax registration
  • Overdrawn director’s loan account
  • Not registering for PAYE before paying a salary
  • Forgetting the confirmation statement

See GOV.UK guidance on setting up a limited company, our deadlines guide and our limited company accountants.

What should I do next?

Register for CT

Within 3 months.

Set up payroll

For your salary.

Separate finances

Business bank account.

Get set up properly

Our team.

Frequently Asked Questions

When must I register for Corporation Tax?

Within three months of starting to trade.

When are first accounts due?

21 months after incorporation.

What salary should a new director take?

Often £12,570, or £5,000 for sole-director companies without Employment Allowance.

Do I need payroll as the only director?

Yes, if you pay yourself a salary.

Can a first accounting period be over 12 months?

Accounts can, but Corporation Tax periods can’t, so two CT600s are needed.

Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.

SR

About the Author

Stephen Reynold
I’m Stephen Reynold, an accountant at Wingate Accountants. I work with sole traders and small companies, turning tax rules into clear, practical next steps.

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