Legal status

What are a limited company's legal obligations?

A limited company has a number of legal obligations including:

  • Tax - companies pay corporation tax on any profits. Companies are required to carry out self-assessment for corporation tax, calculating the amount of tax payable themselves. Both employers and employees, including directors, must pay income tax under the Pay as You Earn (PAYE) scheme.
  • National Insurance - both employers and employees, including directors, pay Class 1 National Insurance contributions.
  • Accounts - companies are required to produce audited accounts and to file an annual report with Companies House. However, many smaller private limited companies (defined as those with turnover of £1 million or less) are exempt from this audit requirement.
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