Running a limited company on your own sounds simple: you are the only director, the only shareholder and the only person making decisions. But when it comes to tax, a one-director company still faces three separate bills, and missing any one of them can lead to penalties. This guide walks through every tax a one-director company pays in 2026/27, with the exact rates, deadlines and a worked example.
Direct answer: A one-director limited company in 2026/27 pays corporation tax of 19% on profits up to £50,000 and 25% above £250,000 (with marginal relief in between), employer National Insurance of 15% on any salary above £5,000, and dividend tax of 10.75% to 39.35% on dividends above the £500 allowance. The company must also file a confirmation statement (£50) and annual accounts.
The three tax bills at a glance
| Tax bill | Who pays it | 2026/27 headline rate |
|---|---|---|
| Corporation tax | The company, on its profits | 19% to 25% |
| Payroll tax (PAYE + employer NIC) | The company, on your salary | 15% employer NIC above £5,000 |
| Dividend tax | You personally, on dividends | 10.75% / 35.75% / 39.35% above £500 |
If you have not yet set your company up, our step-by-step guide explains how to register a limited company in the UK, including the £100 online filing fee. Once the company exists, the tax bills below begin.
1. Corporation tax: the company’s own tax bill
Corporation tax is charged on your company’s taxable profits — broadly, its income minus allowable business expenses. For the financial year 1 April 2026 to 31 March 2027, the rates are confirmed in the GOV.UK rates and allowances for Corporation Tax publication:
| Taxable profit | Corporation tax rate |
|---|---|
| Up to £50,000 | 19% (small profits rate) |
| £50,001 to £250,000 | Tapered from 19% to 25% (marginal relief) |
| Over £250,000 | 25% (main rate) |
Marginal relief smooths the jump between the two rates. The relief is calculated as 3/200 of the gap between £250,000 and your profit, deducted from tax charged at 25%. One quirk worth knowing: inside the marginal relief band, each extra £1 of profit effectively costs 26.5p in tax, because you pay 25% on the extra pound and lose 1.5p of relief at the same time. This makes pension contributions and capital spending unusually valuable in that band, since they save tax at up to 26.5p in the pound.
Corporation tax is due 9 months and 1 day after the end of your accounting period (for profits up to £1.5 million), while the company tax return (CT600) must be filed within 12 months of the period end. Late filing penalties start at £100 and rise to £200 after three months, with further penalties for repeated lateness.
2. Paying yourself a salary: PAYE and employer National Insurance
Most one-director companies pay the director a small salary plus dividends, because a salary up to the Personal Allowance is free of income tax and the company gets corporation tax relief on it. In 2026/27 the Personal Allowance is £12,570, so a salary of £12,570 attracts no income tax and no employee National Insurance, since it sits exactly at the primary threshold.
Employer National Insurance is a different story, and it catches many solo directors by surprise. In 2026/27 employers pay 15% on pay above £5,000 per employee. A £12,570 salary therefore creates an employer NIC bill of 15% × £7,570 = £1,135.50. Normally, small employers can claim the £10,500 Employment Allowance against this bill — but a company with only one employee who is also a director cannot claim it. That single-director exclusion is one of the most commonly missed rules in one-director company tax, and it is exactly why many accountants set the salary lower, at the £5,000 secondary threshold, so no employer NIC is due at all.
A £5,000 salary still counts as a qualifying year for the State Pension, provided it is reported through PAYE and sits above the £6,500 lower earnings limit. Whichever salary you choose, you must run PAYE, file Real Time Information submissions and pay HMRC by the 22nd of the following month (19th if you pay by cheque).
Worked £ example: £60,000 profit, salary plus dividends
Imagine your company makes £60,000 of taxable profit in the year to 31 March 2027. Here is how the tax falls:
Step 1 — Corporation tax. Tax at 25% on £60,000 is £15,000. Marginal relief is 3/200 × (£250,000 − £60,000) = £2,850. The corporation tax bill is £15,000 − £2,850 = £12,150, an effective rate of 20.25%. That leaves £47,850 in the company.
Step 2 — Salary. You take a £12,570 salary. No income tax and no employee NIC are due, but the company pays £1,135.50 of employer NIC (15% of the £7,570 above £5,000), because the Employment Allowance is not available to a one-director company.
Step 3 — Dividends. You then take £30,000 in dividends. Your total income is £42,570, which sits inside the basic rate band (up to £50,270). The £12,570 Personal Allowance covers your salary, so the first £500 of dividends is covered by the dividend allowance and the remaining £29,500 is taxed at 10.75%, giving dividend tax of £3,171.25.
Total tax on the £60,000 profit: £12,150 + £1,135.50 + £3,171.25 = £16,456.75. You keep £42,570 of income, and £17,850 remains in the company for future dividends, expenses or a rainy day. Keeping money in the company rather than drawing it all at once is often the smartest move, because dividends drawn in a later, lower-income year may be taxed at a lower rate.
3. Dividend tax: the personal bill on what you take out
Dividends are not a business expense, so they do not reduce corporation tax — they are paid out of after-tax profit. In 2026/27, the first £500 of dividends is tax-free, and the rest is taxed at 10.75% inside the basic rate band, 35.75% inside the higher rate band and 39.35% at the additional rate. Note that these rates rose by 2 percentage points in April 2026, so any older guide quoting 8.75% or 33.75% is out of date.
Two rules matter here. First, you can only pay dividends out of distributable profits — if the company has not made enough profit after tax, a dividend is unlawful and HMRC can treat it as a director’s loan instead. Second, a dividend must be properly declared with board minutes and a dividend voucher, even when you are the only director and shareholder. It takes five minutes and it keeps your records clean if HMRC ever asks.
Other bills a one-director company must not forget
Business tax is not only the three bills above. A one-director company also faces:
- VAT — you must register once taxable turnover passes £90,000 in a rolling 12 months, and you have 30 days to do so. You can deregister if turnover falls below £88,000.
- Confirmation statement — £50 per year, filed within 14 days of your review period, confirming directors, shareholders and people with significant control are up to date.
- Annual accounts — filed with Companies House within 9 months of the year end, with late penalties from £150 to £1,500.
- Director’s loan tax — if you borrow from the company and the loan is still outstanding 9 months after the year end, a 35.75% charge applies to the outstanding amount.
Deadlines at a glance
| Obligation | 2026/27 deadline |
|---|---|
| Corporation tax payment | 9 months + 1 day after year end |
| Company tax return (CT600) | 12 months after year end |
| Annual accounts (Companies House) | 9 months after year end |
| Confirmation statement | Within 14 days of review period (£50 fee) |
| PAYE payments | 22nd of the following month |
| VAT return and payment | 1 month + 7 days after quarter end |
5 mistakes one-director companies keep making
- Assuming the Employment Allowance applies. It does not, if you are the only employee and a director. Budget for the full 15% employer NIC on salary above £5,000.
- Taking dividends without checking profits. Dividends paid when the company has no distributable profit can be reclassified as a loan, triggering the 35.75% director’s loan charge.
- Mixing personal and company money. Using the company card for personal spending creates a director’s loan account problem and muddies your records. Keep the two strictly separate.
- Leaving the company tax return to the last minute. The CT600 deadline is 12 months after the year end, but the payment deadline is earlier — 9 months and 1 day. Many directors file late and pay interest on top.
- Forgetting the confirmation statement. It costs only £50 and takes minutes, but missing it can lead to the company being struck off the register.
Conclusion
A one-director company does not mean one tax bill. Corporation tax takes its share first, payroll costs apply to your salary, and dividend tax applies to what you draw out. The good news is that the system is predictable: with the 2026/27 rates above and a simple salary-plus-dividends plan, you can work out your total bill before the year ends and keep a sensible reserve inside the company. If your profits are growing into the marginal relief band or past £250,000, that is the point where professional advice usually pays for itself.
Frequently asked questions
Does a one-director company pay less tax than a sole trader?
Often, yes, once profits pass roughly £40,000 to £50,000, because corporation tax at 19% to 25% plus dividend tax can work out lower than income tax at 40% plus Class 4 National Insurance. At lower profits, a sole trader is usually simpler and cheaper overall.
Can a one-director company claim the Employment Allowance?
No. Companies with only one employee who is also a director are excluded from the £10,500 Employment Allowance. This is why many solo directors keep their salary at £5,000, where no employer NIC is due.
What salary should a one-director company pay in 2026/27?
The two common choices are £5,000 (no employer NIC, still a qualifying year for the State Pension) or £12,570 (uses the full Personal Allowance but costs £1,135.50 in employer NIC). The right choice depends on your other income and your dividend plans.
Do I need an accountant for a one-director company?
Not legally, but most solo directors use one. The CT600, annual accounts, confirmation statement and PAYE filings all have different deadlines, and an accountant’s fee is an allowable business expense that reduces your corporation tax bill.
