Company Directors and Self Assessment 2026/27: What You Must Report

Running a limited company as a director-shareholder gives you flexibility in how you extract profits -- but it comes with annual reporting obligations that are more complex than a simple PAYE employment. Self Assessment is mandatory for most company directors, and getting it right requires understanding how salary, dividends, loans and benefits in kind interact.

Why Directors Must File Self Assessment

HMRC's starting position is that all company directors must register for Self Assessment. The rationale is that directors typically receive income that is not fully taxed at source through PAYE: dividends, benefits in kind, director loans, and potentially rental income or investment income on top of their salary.

There is a narrow exception for directors who receive only a salary through PAYE, have no other untaxed income, and are advised by HMRC that they do not need to file a return. This exception rarely applies in practice because most director-shareholders take a combination of salary and dividends, and dividends are not subject to PAYE.

If you are a new director, you should notify HMRC by 5 October following the end of the first tax year in which you need to file a return. For the 2026/27 tax year (ending 5 April 2027), the notification deadline is 5 October 2027.

Salary: The Low-Pay Strategy and Its Limits

Most director-shareholders pay themselves a salary set at or just above the Lower Earnings Limit (£6,500 per year in 2026/27) or the Primary Threshold (£12,570), with the balance of their income taken as dividends. The low salary strategy works because:

• A salary at the LEL qualifies you for state pension and benefit entitlement without triggering personal NI contributions
• A salary at the Primary Threshold of £12,570 is exactly covered by the personal allowance, producing no income tax
• Dividends are taxed more favourably than additional salary at most tax rates

The salary you receive from the company is subject to PAYE income tax and NI as for any other employment. Your company reports this through its payroll and Real Time Information (RTI) submissions. On your Self Assessment return, you include the salary as employment income, supported by the P60 your company issues to you after the tax year.

Dividends: Rates, Allowance and Reporting

Dividends are distributions of company profit to shareholders after corporation tax has been paid. They are not subject to NI -- which is one of their key advantages. The tax rates on dividends in 2026/27 are:

• Dividend allowance: £500 (first £500 of dividend income is tax-free)
• Basic rate band (income up to £50,270): 8.75%
• Higher rate band (£50,271-£125,140): 33.75%
• Additional rate (over £125,140): 39.35%

Dividends are stacked on top of other income when calculating which rate band applies. A director with a £12,570 salary (using the full personal allowance) and £40,000 of dividends has total income of £52,570. The first £500 of dividends is tax-free. The next £37,200 of dividends fall within the basic rate band (taxed at 8.75%). The remaining £2,300 of dividends fall into the higher rate band (taxed at 33.75%).

On the Self Assessment return, dividends are reported on the SA106 supplement if they come from UK companies. The company must have passed a valid dividend resolution (board minutes in the case of a single director, or a full shareholder resolution for multiple shareholders) and must be distributing genuine profits -- paying dividends when the company has insufficient distributable reserves is unlawful and can be challenged by HMRC as a disguised salary.

Director's Loan Accounts: A Tax Minefield

A director's loan account (DLA) records money moving between the director personally and the company outside of salary and dividends. When a director borrows money from the company -- takes a cash withdrawal not designated as salary or dividend -- this is a director's loan.

Director's loans are permitted but carry significant tax consequences:

S.455 charge: If the DLA is overdrawn at the company's year-end and is not repaid within nine months and one day, the company must pay a Section 455 tax charge of 33.75% on the outstanding balance. This charge is paid to HMRC and is repayable to the company once the loan is repaid -- but it can cause a serious cash flow problem if a company has a large outstanding DLA and insufficient funds.

Beneficial loan interest: If the director has an outstanding loan from the company above £10,000 at any point during the tax year, a benefit in kind arises on the notional interest at HMRC's official rate. This must be reported on the director's P11D and taxed personally.

Writing off the loan: If the company formally writes off or releases a director's loan, the amount written off is treated as income of the director in the year of write-off and is subject to income tax via Self Assessment.

Benefits in Kind: P11D and Payrolling

When a company provides benefits to a director -- a company car, private medical insurance, a gym membership, accommodation -- the value of those benefits is taxable income for the director. There are two ways these are reported and taxed:

P11D route: The company reports the benefit on form P11D by 6 July following the tax year. The director then includes the P11D benefits on their Self Assessment return and pays tax on the combined value through their January payment. The company separately pays Class 1A NI at 15% on the P11D value by 19 July.

Payrolling benefits: Since April 2016, employers have been able to process benefits through payroll in real-time, adding the taxable value of the benefit to the employee's monthly pay figure and applying PAYE. This is now the preferred route and from April 2026 becomes mandatory for new benefits (though cars and living accommodation can continue on P11D).

Common director benefits and their valuation:

• Company car: Based on the P11D value multiplied by the appropriate BIK percentage (see the BIK guide for details)
• Private medical insurance: Taxed on the cost to the company of the policy premium
• Loans above £10,000: Notional interest at the official rate on the average balance
• Accommodation: Assessed based on the Annual Value of the property (rateable value or deemed rental)

Savings Interest and the Personal Savings Allowance

Many directors accumulate savings in personal accounts alongside running their company. In 2026/27, the first £1,000 of savings interest is tax-free for basic rate taxpayers (the Personal Savings Allowance or PSA). Higher rate taxpayers have a £500 PSA. Additional rate taxpayers have no PSA.

Interest above the PSA is taxed at your marginal income tax rate (20%, 40% or 45%) and must be declared on Self Assessment. Banks and building societies report interest paid to HMRC automatically, so HMRC often already knows about savings interest when it issues a notice to complete a return.

Directors with significant savings outside ISAs should check their interest carefully each year. With interest rates remaining above 4% at many high-street banks, a director with £100,000 in savings could easily earn £4,000 in interest -- well above the basic rate PSA of £1,000. The excess £3,000 is taxable income on the Self Assessment return.

Key Deadlines for 2026/27

• 5 October 2027: Deadline to register for Self Assessment if new to filing
• 31 October 2027: Paper return deadline for 2026/27
• 31 January 2028: Online return deadline and balancing payment due
• 31 January 2028: First payment on account for 2027/28 (50% of 2026/27 liability)
• 31 July 2028: Second payment on account for 2027/28 (50% of 2026/27 liability)
• 6 July 2027: P11D deadline for benefits in the 2026/27 tax year
• 19 July 2027: Class 1A NI payment deadline (22 July if paying electronically)

Missing any of these deadlines triggers automatic penalties. Keeping accurate records throughout the year -- salary payments, dividend vouchers, director's loan movements, P11D benefits -- makes completing the Self Assessment return far simpler and reduces the risk of errors that could trigger HMRC inquiries.