Does a Limited Company Have to Have an Accountant in the UK?
Starting and running a limited company in the UK comes with various legal and financial responsibilities. One common question many business owners ask is: “Does a limited company have to have an accountant?”
The short answer is no—there is no legal requirement for a limited company to hire an accountant. However, the complexities of tax laws, financial reporting, and compliance mean that many businesses choose to use an accountant to avoid costly mistakes.
Benefits of Hiring an Accountant for Your Limited Company
Even though it’s not mandatory, hiring an accountant offers major advantages:
Compliance & Avoiding Penalties
Accountants ensure:
Annual accounts are filed correctly and on time
Corporation Tax is calculated accurately
VAT returns and payroll submissions are error-free
Tax Efficiency & Savings
A good accountant will:
- Claim all allowable expenses (e.g., travel, office costs, equipment)
- Advise on tax-efficient salaries and dividends
- Help with R&D tax credits (if applicable)
- Plan for Capital Gains Tax (CGT) and IR35 compliance
Financial Planning & Business Growth
Accountants provide:
- Cash flow forecasts to prevent financial shortfalls
- Profitability analysis to guide business decisions
- Funding advice (loans, grants, investors)
Saves Time & Reduces Stress
Instead of struggling with spreadsheets, you can focus on growing your business while an accountant handles the numbers.
Risks of Not Using an Accountant
While it’s possible to DIY, skipping an accountant can lead to:
Late Filing Penalties
- Companies House fines (£150-£1,500 for late accounts)
- HMRC penalties for late tax returns
Incorrect Tax Calculations
- Overpaying tax by missing deductions
- Underpaying and facing HMRC investigations
Cash Flow Problems
Poor financial management can lead to unexpected tax bills or missed growth opportunities.
Legal Risks
Errors in payroll, VAT, or dividends could trigger audits or legal action.
Legal Requirements for Limited Company Accounting
While you don’t legally need an accountant, UK law requires all limited companies to:
Maintain Accurate Financial Records
Under the Companies Act 2006, every limited company must keep proper accounting records, including:
- All money received and spent
- Assets and liabilities
- Stock (if applicable)
- Goods bought and sold (with supporting invoices)
These records must be kept for at least six years (or longer for some tax purposes).
File Annual Accounts with Companies House
Every limited company must submit:
- Statutory annual accounts (abbreviated or full, depending on company size)
- A Confirmation Statement (formerly Annual Return)
- A Corporation Tax Return (CT600) to HMRC
Failure to file on time can result in fines and even company dissolution.
Submit a Corporation Tax Return
Your company must calculate and pay Corporation Tax (currently 19%-25%, depending on profits). This involves:
- Calculating taxable profits
- Claiming allowable expenses and reliefs
- Filing a CT600 form with HMRC
Register for VAT (If Applicable)
If your turnover exceeds £90,000 (2024 threshold), you must register for VAT and submit quarterly VAT returns.
Payroll and PAYE (If You Have Employees)
If you pay salaries, you must:
- Register as an employer with HMRC
- Run payroll and report via RTI (Real Time Information)
- Deduct Income Tax and National Insurance
Self Assessment Tax Returns for Directors
Company directors must file a Self Assessment tax return each year, even if they don’t take a salary.
Given these obligations, many business owners find an accountant invaluable—but is it possible to handle them yourself?
Can You Do Your Own Accounts Without an Accountant?
Yes, you can manage your own company accounts if:
- You have a good understanding of bookkeeping and tax rules
- Your business is small with straightforward transactions
- You’re comfortable using accounting software (e.g., Xero, QuickBooks, FreeAgent)
Pros of DIY Accounting:
Cost Savings – No accountant fees (typically £500-£2,000+ per year)
Full Control – You oversee every financial decision
Faster Updates – No waiting for an accountant to process records
Cons of DIY Accounting:
Time-Consuming – Learning tax rules and filing correctly takes hours
Risk of Errors – Mistakes can lead to fines or HMRC investigations
Missed Tax Savings – Accountants know legal ways to reduce tax bills
If you choose to DIY, consider using HMRC-recognized accounting software to simplify the process.