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Do I need to file a director Self Assessment tax return?

  • 4 min read
  • Last updated 18 Jul 2024

If you’re a company director in the UK, you might be wondering about your tax obligations – like whether or not you need to file a director Self Assessment tax return. Oh, the joy!

But seriously, getting it right is important. And filing a Self Assessment tax return isn’t just for the self-employed. Limited company directors might need to file too. 

Let’s dive into the details to help you understand whether you need to file a Self Assessment tax return. And how to go about it if you do.

What exactly is a Self Assessment?

Most people think that Self Assessment is just how HMRC collects Income Tax from those who are employed (on PAYE). 

While that’s true, it can also be used to report untaxed income such as dividends, rental income, and additional earnings.

Just being a company director doesn’t mean you automatically need to file a Self Assessment tax return, though.

Wait, are you classified as self-employed if you’re a director?

Nope, being a company director doesn’t make you self-employed. 

Directors are often employees of their companies, getting paid through PAYE. If this is your only means of income, you probably won’t need to file a Self Assessment.

However, you might still need to file a Self Assessment if certain criteria apply to you. We’ve outlined this below, so make sure you take note.

Filing your company tax return

Remember, as a company director, you’ll probably also need to file a company tax return. TaxScouts can help! Get your company taxes sorted for a one-off, fixed price. Easy, as always.

So, do I need to file a Self Assessment tax return as a company director?

A common misconception is that all directors must file a Self Assessment tax return. This isn’t true. 

If all your income is PAYE and you have no other untaxed income (such as dividend payments), you probably don’t need to file one. But we do recommend you check the below criteria just to be sure.

You need to file a Self Assessment tax return if:

  1. HMRC issues you a notice
  2. You receive dividend payments from your company
  3. You have other sources of income

Still not sure?

Get professional tax advice from an accredited accountant. They’ll help you figure out the best and most tax-efficient solution to your tax situation!

1. Why have HMRC issued me a notice that I need to file a Self Assessment?

If HMRC have issued you a notice, you’ll need to file a Self Assessment tax return. This is because HMRC believes you’re required to file.

If you think they’ve done so wrongly, it’s best to speak with HMRC directly or chat with your accountant.

2. What do dividend payments have to do with directors and Self Assessment?

As a shareholder of your company, you can pay yourself a share of the company’s profits. This is known as a dividend. 

Many directors receive dividends as they’re taxed at a lower rate than income tax. This makes them a tax-efficient way to get paid.

Tax due on dividend payments isn’t taxed at source like your salary (PAYE). If your dividends exceed the £500 tax-free dividend allowance, you need to report this income via Self Assessment.

How much you’ll pay depends on your tax bracket:

​​Take a look at the table below to see what you might owe in the 2024/25 tax year.

Annual salaryTax bracketTax rate
Up to £12,570Personal Allowance0%
£12,570 – £50,270Basic rate8.75%
£50,271 – £125,140Higher rate33.75%
£125,140+Additional rate39.35%

So, in short, if you receive dividend payments over £500, you’ll need to file a director’s Self Assessment tax return.

Use our dividend tax calculator to estimate how much tax you might have to pay:

Your situation

Outlined number oneImage of an arrow
How did you earn dividends?
Dividend income
£
Other income
?
£

Tax and profit

Outlined number two
  • Your dividend profits
    £3,000
  • Dividend tax to pay
    £219
    £500 tax-free dividend allowance
    ?
  • Profit after tax
    £2,781
  • You can either call HMRC on 0300 200 3300 to take this tax from your salary or pension, or include it on your Self Assessment tax return.

    How your dividend tax is calculated

    Tax on dividends is calculated pretty much the same way as tax on any other income.

    The biggest difference is the tax rates – instead of the usual 20%, 40%, 45% (depending on your tax band), you’ll be taxed at 8.75%, 33.75%, and 39.35%.

    The numbers look strange but the reason is simple: the company paying you those dividends already paid corporate tax, so you’re paying the difference.

    This is mostly relevant if you own your company and you’re trying to decide the best way to pay yourself: dividends or salary. Keep in mind that if you pay from your salary, you also need to pay National Insurance.

    In your case you earned £3,000 in dividends and £29,000 in other income (this can be salary, rent, etc.).

    Dividend Tax

    You don’t pay any dividend tax on the first £500 you make in dividends.

    You pay 8.75% on the next £2,500

    Call HMRC on 0300 200 3300 so they can change your tax code – you’ll pay the dividend tax through your salary or pension.

    If you normally file a tax return, you can also pay dividend tax through it.

    3. Other sources of income

    If you have other sources of income as a director, you’ll also need to file a Self assessment.

    Other sources of income could include:

    Plus, more! Read all the possible scenarios in our who needs to file tax guide

    Now, let’s get into how you can file your tax return.

    Are there any exceptions?

    If you don’t meet the above criteria, then you’re off the hook. You won’t need to file a director Self Assessment. Yay!

    This means that:

    • Your income is taxed at source and you have no other sources of income
    • You haven’t received a notice from HMRC to file a return

    How to register for Self Assessment as a company director

    If you know you need to file a Self Assessment, you’ll be happy to hear that getting started is pretty easy.

    First up, you’ll need to register with HMRC. You can do this online. Head to the HMRC website to register for Self Assessment.

    HMRC will then send you a Unique Taxpayer Reference (UTR). Keep this handy so you can sign in later. You’ll then receive an activation code in the post. Use this (along with your UTR) to set up your online account.

    Filing your company director Self Assessment tax return

    Now that you’re registered, here’s how to file your Self Assessment tax return:

    1. Gather important documents. You might need:
      • P60 (end-of-year certificate)
      • P45 (if you’ve left a job)
      • Dividend vouchers
      • Bank statements or records of other income

    If you use TaxScouts to file, here’s a guide on what documents you need when filing a director Self Assessment.

    1. Complete the return online:
      • Log in to your HMRC online account
      • Follow the on-screen instructions to complete your tax return
    2. Submit your return: Make sure you submit your tax return by the 31st January deadline for online returns

    Get help with your company director Self Assessment

    Filing your tax return can be a little complicated, so you might prefer to hire an accountant.

    For £169 all in, we’ll match you with an accredited accountant who will file your tax return for you. The same accountant can also help you file your company tax return.

    Get Started

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