Self-assessment, PAYE, and corporation tax — the three obligations every UK founder must understand before year one ends

Most UK founders discover their tax obligations for the first time when something goes wrong — a penalty notice, an unexpected demand, or a conversation with an accountant that reveals months of missed deadlines. This is an attempt to explain the three most common obligations before that conversation becomes necessary.

Self-assessment (Personal tax — sole traders and directors)

If you are a sole trader, a partner in a partnership, or a director of a limited company, you are required to submit a self-assessment tax return to HMRC for each tax year in which you have taxable income. The UK tax year runs from 6 April to 5 April. The online filing deadline is 31 January following the end of the tax year — so for the tax year ending 5 April 2026, the online filing deadline is 31 January 2027. The payment deadline for any tax owed is the same date.

The late filing penalty is £100 immediately, plus £10 per day from 3 months late (up to 90 days), plus further penalties at 6 and 12 months. These penalties apply even if you owe no tax. Register for self-assessment with HMRC as soon as you start trading or become a director — the registration deadline is 5 October after the tax year in which you started.

PAYE (Employer obligations — if you pay anyone including yourself a salary)

If your limited company pays you or anyone else a salary — including a director's salary — you must register as an employer with HMRC and operate PAYE. This means deducting income tax and National Insurance from salaries, paying employer's National Insurance on top, reporting to HMRC via Real Time Information (RTI) on or before each pay day, and paying the deductions to HMRC by the 19th of the following month (or 22nd if paying electronically).

Corporation tax (Limited companies)

Limited companies pay corporation tax on their profits. The current rate is 25% for profits above £250,000, 19% for profits below £50,000, and marginal relief between the two thresholds. You must file a corporation tax return (CT600) within 12 months of the end of your accounting period, and pay any corporation tax owed within 9 months and 1 day of the end of the accounting period — which is before the filing deadline. This catches many founders off guard: the payment is due before the return is filed.