Limited company guide UK 2026

A limited company is legally separate from the people who own it. Directors are responsible for running it and shareholders own it where the company is limited by shares.

Limited liability normally means owners are responsible for company debts only up to the value of their financial investment, although personal guarantees and director conduct can create personal exposure.

A private limited company is incorporated at Companies House. You choose the company name, registered office, directors, shareholders or guarantors, share structure where relevant, SIC code and governing documents.

A company limited by shares must have at least one shareholder. One person can be the sole shareholder and sole director.

The main private company types are limited by shares and limited by guarantee. Most profit-making private companies are limited by shares. Companies limited by guarantee are often used by non-profit organisations and charities.

For financial year 2026, the small profits rate is 19% for profits of £50,000 or less. The main rate is 25% where profits are above £250,000. Marginal Relief may apply between those limits.

The profit thresholds are reduced for short accounting periods and by the number of associated companies. Corporation Tax is based on taxable profit, which can differ from the accounting profit shown in the annual accounts.

Common routes include salary, dividends, repayment of money previously lent to the company, reimbursed business expenses and qualifying employer pension contributions.

Each route has different tax and company-law rules. Dividends can only be paid from available distributable profits and are taxed on the shareholder.

A private company normally prepares statutory annual accounts and a Company Tax Return. It must also file a confirmation statement at least once every 12 months.

For a private company, annual accounts are normally due 9 months after the financial year end. A Company Tax Return is normally due 12 months after the end of the Corporation Tax accounting period, while Corporation Tax is usually payable 9 months and 1 day after that period ends. Different rules can apply to large companies and first accounts.

The company must keep company records and financial and accounting records. Company finances must be kept separate from the personal finances of owners and directors.

A company limited by shares can issue shares and can seek business loans and investment. Tax-advantaged investment schemes such as SEIS or EIS may be available where the company and investor meet the relevant conditions.

A company can make employer contributions to a registered pension scheme. For Corporation Tax purposes, an employer contribution is generally deductible where it is incurred wholly and exclusively for the purposes of the trade, subject to the detailed rules and timing provisions.

A Corporation Tax trading loss can generally be set against other gains or profits of the company in the same accounting period. It may also be carried back where the rules allow or carried forward to a later accounting period.

A company loss belongs to the company. It is not normally deducted directly from a shareholder’s personal salary or other personal income.

A limited company can provide separation between the owner and the business, limited liability and a structure that can issue shares. The trade-off is more administration, public filings and director responsibilities.