A UK contractor running a personal limited company is subject to the full range of statutory duties that apply to any UK company, scaled to the single-employee context. The CT600 corporation tax return, the annual statutory accounts (typically filed under FRS 105 for micro-entities), the confirmation statement, the PAYE returns even for a single-director payroll, the P11D for any benefits in kind. Each is on its own deadline; missing any of them creates fines that compound across cycles.
This guide covers the major compliance obligations for contractor-directors. Each section links to a detailed companion piece.
The Director's Loan Account is the most-mismanaged contractor compliance issue
A director who takes funds from the company beyond declared salary or dividend creates an overdrawn director's loan account (DLA). If not repaid within 9 months and 1 day of the year-end, Section 455 corporation tax of 33.75% applies to the outstanding balance. The tax is recoverable when the loan is eventually repaid but the cash impact in the meantime is material.
FRS 105 micro-entity accounts
Most contractor companies qualify as "micro-entities" under FRS 105. The qualifying conditions (any 2 of 3):
- Turnover up to £632,000.
- Balance sheet total up to £316,000.
- No more than 10 employees.
FRS 105 produces simplified statutory accounts: an abbreviated balance sheet, a profit and loss account, and minimal notes. No directors' report required. Filed at Companies House as a single short document. Most contractor companies fit comfortably and benefit from the lighter compliance burden.
Filing deadlines for contractor companies
| Obligation | When | Late penalty |
|---|---|---|
| Corporation tax payment | 9 months and 1 day after period end | Interest only |
| Statutory accounts (Companies House) | 9 months after period end | £150-£1,500 (doubles for repeat lateness) |
| CT600 corporation tax return (HMRC) | 12 months after period end | From £100, escalating to 10% of unpaid tax |
| Confirmation statement (Companies House) | 14 days after each anniversary of incorporation | No financial penalty but director offence |
| Self Assessment for the director | 31 January after end of tax year | £100 immediately, escalator to £900+ |
| PAYE FPS submissions (RTI) | On or before each payday | Per-employee monthly penalties |
| P11D and Class 1A NIC | 6 July after tax year end / 22 July for payment | Penalties apply if late |
The Director's Loan Account
The DLA tracks transactions between the director and the company that are not salary, dividends, or genuine business expenses:
- 1Money taken from the company beyond declared salary or dividend creates a DLA in debit (overdrawn).
- 2Personal expenses paid by the company that the director ultimately reimburses: temporary DLA balance.
- 3If the DLA stays in debit at the year-end, the director has 9 months and 1 day to repay or the company pays 33.75% Section 455 tax on the outstanding balance.
- 4Section 455 tax is recoverable when the loan is eventually repaid (file form CT600A on the relevant year's return).
- 5Where the DLA is over £10,000 at any time, a benefit-in-kind charge applies (the difference between actual interest paid and HMRC's official rate).
- 6Bed-and-breakfasting (repaying then re-borrowing the same amount shortly after) does not relieve the Section 455 charge.
- 7On eventual closure of the company, an unrepaid DLA must be cleared before MVL distributions can flow as capital.
Multiple income streams
Many contractors layer additional income streams alongside contracting: rental property, e-commerce side-hustle, dividend portfolio, occasional employment. Each has its own tax regime and its own administrative overhead:
- Rental income: declared on Self Assessment via the SA105 supplementary page.
- E-commerce: typically operated through the same limited company or a separate vehicle; turnover thresholds for VAT apply.
- Dividend portfolio income: declared on Self Assessment via SA106 (foreign) or the main return.
- Employment income: PAYE-deducted at source; appears on Self Assessment alongside contracting income.
- Crypto: chargeable disposals declared on the CGT pages; staking and DeFi income on the income pages.
Cloud accounting stacks
For single-director contractor companies, two software options dominate: FreeAgent (often free with NatWest/Mettle/RBS business banking; ~£20/month otherwise) and Xero (£15-30/month). Both handle CIS, MTD VAT, MTD ITSA (when required), payroll for a single director, and CT600 calculations. FreeAgent is more contractor-orientated; Xero is more general-purpose with stronger ecosystem integrations.
P11D and benefits in kind
Where a contractor-director receives benefits beyond salary and dividends, P11D reporting may be required:
- Company car (especially relevant for EV salary sacrifice).
- Private medical insurance paid by the company.
- Beneficial loans (DLA over £10,000 attracting BIK).
- Living accommodation provided by the company.
- Some types of subscription not on HMRC's approved list.
P11D filed by 6 July after end of tax year; Class 1A NIC of 13.8% on the BIK value paid by 22 July (post-payment) or 19 July (post-bank-cheque). Most contractor companies have minimal P11D (often only the company car if applicable).
Running a tax-compliant single-employee payroll
A contractor-director paying themselves a salary triggers PAYE registration and ongoing RTI submissions. The minimum cycle:
- 1Set up payroll software (FreeAgent Payroll, Xero Payroll, BrightPay all handle single-director).
- 2Each pay period (usually monthly): generate the payslip, submit FPS to HMRC on or before payday.
- 3Pay the salary to yourself.
- 4Each month or quarter: pay the deducted tax and NI to HMRC by the 22nd.
- 5End of year: submit final FPS and EPS, generate P60 for yourself.
Statutory compliance review or DLA mess to fix?
A specialist contractor accountant will reconcile your DLA, file outstanding documents, and put you on a clean compliance footing. Free initial assessment.