Limited company glossary.
60 company formation and limited company terms in plain English, each linked to the guide that explains it in depth.
A
- Accounting reference date (ARD)
- The day and month on which a company’s financial year ends each year. Companies House sets it to the last day of the month of incorporation anniversary unless the company changes it. Read the guide
- Annual accounts
- Financial statements a company must prepare and file with Companies House each year, usually within nine months of the end of the financial year. Read the guide
- Articles of association
- The written rules that govern how a company is run, including how directors make decisions and how shares are transferred. Most new companies adopt the model articles. Read the guide
- Authentication code
- A six-character code sent by Companies House to the registered office, used to authorise online filings for the company. Read the guide
B
- Benefit in kind
- A non-cash benefit an employee or director receives because of their job, such as a company car, which may be taxable and reported to HMRC. Read the guide
- Business rates
- A tax on non-domestic property, collected by local councils. Small business rate relief can reduce or remove the bill. Read the guide
C
- Capital allowances
- Tax relief that lets a company deduct the cost of qualifying equipment and other assets from its taxable profits. Read the guide
- Certificate of incorporation
- The official document issued by Companies House confirming a company exists, showing its name, number and date of incorporation. Read the guide
- Companies House
- The UK government registrar of companies. It incorporates and dissolves companies and keeps the public register of company information. Read the guide
- Company limited by guarantee
- A company whose members guarantee a fixed sum instead of buying shares. Commonly used by charities, clubs and not-for-profit organisations. Read the guide
- Company number
- The unique eight-character reference Companies House gives a company when it is incorporated. It must appear on company stationery and websites. Read the guide
- Confirmation statement
- A yearly filing that confirms the company information held by Companies House is correct, with a filing fee. It replaced the annual return. Read the guide
- Corporation Tax
- Tax a UK company pays on its taxable profits. The small profits rate is 19% and the main rate is 25%, with marginal relief in between. Read the guide
- CT600
- The Company Tax Return form filed with HMRC to report a company’s profits and the Corporation Tax due. Read the guide
D
- Director
- A person appointed to manage a company and make decisions on its behalf. Directors have legal duties under the Companies Act 2006. Read the guide
- Director’s loan account
- A record of money the director takes from or lends to the company that is not salary, dividends or expense repayments. Read the guide
- Dividend
- A payment to shareholders from the company’s profits after Corporation Tax. Dividends can only be paid from distributable profits. Read the guide
- Dividend voucher
- A record given to each shareholder showing the dividend paid, the date and the number of shares held. Read the guide
- Dormant company
- A company that is not trading and has no significant transactions in its financial year. Dormant companies still file accounts and confirmation statements. Read the guide
E
- Employer’s National Insurance
- National Insurance a company pays on employees’ earnings above the secondary threshold. Employment Allowance can reduce the bill for eligible employers. Read the guide
- Employment Allowance
- A yearly reduction in employer’s National Insurance for eligible employers. Companies whose only employee is a director are usually not eligible. Read the guide
- EORI number
- An Economic Operators Registration and Identification number, needed to move goods into or out of the UK. Read the guide
F
- Formation agent
- A company authorised to submit incorporation applications to Companies House on behalf of customers, often with extra services bundled in. Read the guide
H
- Holding company
- A company whose main purpose is to own shares in one or more other companies, known as subsidiaries. Read the guide
I
- Identity verification
- A Companies House requirement for directors and people with significant control to verify their identity and receive a personal code. Read the guide
- Incorporation
- The legal process of forming a company, completed when Companies House registers it and issues a certificate of incorporation. Read the guide
- IR35
- Off-payroll working rules that decide whether a contractor working through their own company should be taxed like an employee. Read the guide
L
- Limited liability
- The principle that shareholders are generally not personally responsible for company debts beyond the amount unpaid on their shares. Read the guide
- LLP
- A limited liability partnership: a separate legal body whose members share profits and are taxed as self-employed individuals. Read the guide
M
- Making Tax Digital
- HMRC’s programme requiring digital records and compatible software to submit VAT returns, being extended to other taxes. Read the guide
- Memorandum of association
- A short legal statement signed by the first shareholders confirming they agree to form the company and become members. Read the guide
- Micro-entity
- A very small company that can prepare simpler accounts. It must meet at least two of the size limits on turnover, balance sheet and employees. Read the guide
- Model articles
- The standard articles of association set out in law, which most new companies adopt unchanged at formation. Read the guide
N
- Nominal value
- The face value of a share, for example £1, set when the share is issued. It is separate from what the share is worth. Read the guide
O
P
- P11D
- The form an employer uses to report taxable benefits in kind given to employees and directors. Read the guide
- PAYE
- Pay As You Earn: the HMRC system employers use to collect income tax and National Insurance from wages, including director salaries. Read the guide
- Personal code
- The code a person receives after verifying their identity with Companies House, used to link them to company appointments. Read the guide
- PSC (person with significant control)
- Someone who owns or controls a company, for example holding more than 25% of shares or votes. PSCs are listed on the public register. Read the guide
R
- R&D tax relief
- Tax relief for companies that spend money on qualifying research and development projects. Read the guide
- Registered email address
- An email address a company must give Companies House so it can be contacted. It is not shown on the public register. Read the guide
- Registered office
- The official address of a company, where legal documents are sent. It must be in the same UK jurisdiction where the company is registered. Read the guide
S
- Same-day formation
- A paid service where an agent submits an application in time for Companies House to process it the same working day, subject to cut-off times. Read the guide
- SEIS / EIS
- Government schemes that give investors tax relief for buying shares in qualifying early-stage companies. Read the guide
- Service address
- A correspondence address for a director that appears on the public register instead of their home address. Read the guide
- SIC code
- A Standard Industrial Classification code that describes what a company does, chosen when you register. Read the guide
- Small profits rate
- The 19% Corporation Tax rate for companies with profits of £50,000 or less, adjusted for associated companies and short periods. Read the guide
- Sole trader
- A self-employed person who runs a business as an individual. Unlike a company, there is no legal separation between owner and business. Read the guide
- Special purpose vehicle (SPV)
- A company set up for one purpose, often to hold buy-to-let property. Read the guide
- Statement of capital
- Details of the shares a company issues: the number, classes, nominal value and rights attached. Read the guide
- Statutory registers
- Records a company must keep, such as registers of members, directors and PSCs. Read the guide
- Strike off
- Removing a company from the register so that it is dissolved and stops existing. Read the guide
- Subsidiary
- A company controlled by another company, usually because that company holds most of its shares. Read the guide
T
- Trade mark
- Registered legal protection for a brand name or logo, separate from registering a company name. Read the guide
- Trading disclosures
- Information a company must show on its premises, website and documents, such as its registered name and number. Read the guide
V
- VAT registration threshold
- The taxable turnover above which a business must register for VAT. Businesses below it can register voluntarily. Read the guide
W
- Webfiling
- Companies House’s online service for filing information. Agents use software filing connected to Companies House instead. Read the guide