FAQ Guide: Starting a Company in the UK

Author: Chris Neame BFP FCA CA(ANZ)

Forming a Company with Companies House

Q: How do I form a company with Companies House?

A: Start by choosing a unique and legally compliant company name. You can check if your company name is available here. Prepare the necessary documents, including the articles of association and details of shareholders and directors. Complete the incorporation process by submitting the registration form (Form IN01) online or by post with the appropriate fee. You will receive a Certificate of Incorporation confirming your company’s legal existence. For guidance, consider seeking help from your accountant or a business that specialises in company formation.

Registering for Taxes with HMRC

Q: What are the steps to register for taxes with HMRC?

A: Once your company is registered, HMRC will automatically send you a Unique Taxpayer Reference (UTR). You must register for Corporation Tax within 3 months of starting business activities. If you plan to hire staff, set up PAYE for employees. Additionally, register for VAT if your turnover exceeds the threshold or if you choose to voluntarily reclaim VAT on expenses. Your accountant can advise you on this and handle the necessary registrations on your behalf.

Getting a Business Bank Account

Q: How can I get a business bank account?

A: Compare features, fees, and benefits of different banks to choose the right one. Gather the necessary documentation like the Certificate of Incorporation, identification for directors, and proof of address. Consider both online and traditional banks for convenience and service levels.

Company Taxes: Tax on Your Salary and Dividend Tax

Q: How are company taxes structured?

A: Company taxes include Corporation Tax on company profits, usually at 19%. Salary tax is subject to income tax and National Insurance contributions. Dividend tax is payable on dividends paid to shareholders, with rates depending on the income tax band. We recommend working with your accountant to determine a tax-efficient payment structure for your situation.

Key Tax Dates Throughout the Year

Q: What are the key tax dates I need to be aware of?

A: Important tax dates include Corporation Tax payment due 9 months and 1 day after the end of your accounting period, quarterly VAT returns, monthly or quarterly PAYE deadlines on the 22nd of each month (if electronic payment), and annual accounts filing with Companies House typically 9 months after your company’s year-end. Your accountant can help you adhere to these deadlines.

Accounting Software Options

Q: What accounting software options are available?

A: Cloud-based solutions like Xero offer accessibility and real-time updates. Look for integrated features such as payroll, VAT, invoicing, and reporting functionalities. Choose software that is user-friendly and offers customer support. Your accountant can provide advice on your accounting software needs, taking into account the specific nature and any complexities associated with your business.

Responsibilities of a Director per the Companies Act

Q: What are the responsibilities of a director according to the Companies Act?

A: Directors must act within their powers, promote the success of the company, and exercise independent judgement. They are responsible for ensuring accurate financial records and timely filings, adhering to company laws and regulations, avoiding conflicts of interest, and maintaining good corporate governance practices.

You can read our FAQ guide on directors responsibilities by clicking here

Tax Exempt Benefits for Directors/Owners in 2024/25

Q: What tax-exempt benefits are available for directors/owners?

A: The first £500 of dividends can be paid tax-free. Pension contributions by the company are usually tax-deductible and can be up to £60,000 per year. Electric company cars may offer tax advantages. 

Private medical insurance can be provided tax-free in certain circumstances, and the cost of medical check-ups, eye tests, and new glasses can also be covered. Trivial benefits like small, irregular gifts up to £50 are also exempt from tax. Directors can also spend up to £150 on a Christmas party each.

Business Set-Up Costs

Q: Can I claim my start-up costs and are they tax-deductible?

A: Yes, start-up costs can be claimed back from your business. We recommend keeping detailed invoices and records of all start-up costs. Commonly, these costs are introduced into the business as a loan from the directors or shareholders, which can be repaid as the company generates cash flow. Proper documentation ensures that these expenses are accurately tracked and can be claimed as deductions where applicable. Start-up costs can include initial expenses such as company registration fees, consultation fees, and certain operational costs. These can be deducted from your business’s income to reduce taxable profit.

Disclaimer: This article is provided for information only and is not intended to provide accounting, tax, legal, or business advice. Always consult with a professional to tailor these strategies to your specific circumstances and stay updated with the latest changes to the legislation.

About Neame & Co

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Neame & Co is a trading name of Neame & Co Accountants Limited which is registered in England & Wales under Company Registration No. 14012065. Neame & Co is registered with the Information Commissioner’s Office under registration No. ZB377959. VAT Registration No. 422891687.