Company Directors: Roles, Responsibilities, and Legal Obligations in the UK

Becoming a company director in the UK is a serious step, a legal role with weighty responsibilities. Directors are expected to guide the company’s strategy, manage its finances, and ensure compliance with a range of legal duties under the Companies Act 2006. It’s a role that demands both oversight and accountability.

This guide covers everything you need to know: the different types of company directors, what the law expects from you, your tax obligations, and the risks and consequences that come with getting it wrong. 

If you’re stepping into this role or are already in the seat, now’s the time to make sure you're fully informed.

What is a company director?

A company director is a person appointed to manage a company’s affairs, make strategic decisions, and ensure the business remains compliant with UK laws. 

Every UK company must have at least one director who is over the age of 16 and not disqualified from the role.

Although many directors are also shareholders, these are two distinct roles. 

Shareholders own the business, while directors manage it on a day-to-day basis and make critical decisions on its behalf.

Types of directors in the UK

Under the Companies Act 2006, the term "director" includes anyone who occupies the position of director, regardless of formal appointment or title. The main categories are:

All these categories of directors owe the same legal duties, including acting within powers, promoting the success of the company, exercising independent judgment, and avoiding conflicts of interest.

How to choose the right type of director for your company

For most small and growing businesses, Executive Directors are the default and most practical option. They’re actively involved in day-to-day operations and help steer the business with hands-on decision-making. If you're starting a limited company or managing a lean team, your directors will almost certainly fall into this category.

Other types of directors exist, but they’re less relevant for the majority of companies:

Unless you're running a complex structure or working with investors, you won’t need to worry about these other roles. Focus on appointing capable executive directors who can lead and manage effectively.

💡Additional considerations

1. Legal compliance:
The Companies Act 2006 requires private companies to have at least one natural person as a director and public companies at least two. Directors must be registered with Companies House.

2. Duties and liabilities:
All directors, regardless of category, must comply with statutory duties under the Companies Act 2006 and can be held personally liable for breaches, including wrongful trading or failure to act in the company’s best interests.

3. Corporate governance:
Combining executive and non-executive directors is considered best practice for balanced governance, promoting both effective management and independent oversight.

4. Role clarity:
Clearly define director roles in the company’s articles of association and board charters to avoid confusion and legal risk.

Legal duties for company directors under the Companies Act 2006

The Companies Act 2006 sets out seven core statutory duties for directors:

A breach of these duties can result in legal action, financial penalties, or disqualification.

Governance responsibilities for UK company directors

While detailed governance codes apply mainly to listed companies, most UK business owners and directors need to focus on core responsibilities that keep their company compliant and running smoothly.

Here are the key governance duties relevant to nearly all UK company directors:

1️⃣ Ensure timely Companies House filings

Directors must ensure annual confirmation statements, accounts, and other required filings are submitted accurately and on time. Missing deadlines can lead to penalties or even company dissolution.

2️⃣ Maintain proper company records

You’re legally required to keep up-to-date statutory registers (such as the register of directors and shareholders), minutes of board meetings, and company resolutions. These may be needed during audits, HMRC reviews, or investor due diligence.

3️⃣ Keep company information accurate

Any changes to company officers, registered office address, or shareholding must be reported to Companies House. Directors are responsible for keeping this information current.

4️⃣ Fulfill tax and accounting obligations

Governance includes ensuring the company meets its tax responsibilities (e.g., Corporation Tax, PAYE, VAT if applicable) and files accounts that comply with UK accounting standards.

5️⃣ Comply with director duties under the Companies Act 2006

This includes duties like acting in the company’s best interests, avoiding conflicts of interest, and exercising reasonable care, skill, and diligence.

6️⃣ Protect and manage company assets

Directors are expected to safeguard company assets, ensure proper use of funds, and avoid wrongful trading, particularly if the business is facing financial difficulty.

7️⃣ Act transparently and responsibly

Directors should act with integrity, ensure key decisions are documented, and be ready to justify actions taken on behalf of the company if needed.

Additional UK-specific governance trends for 2025

Tax responsibilities of company directors

One of the most critical obligations of a company director is ensuring compliance with UK tax laws. This covers both company taxes and personal tax liabilities related to directorship.

🔸 Corporation Tax

All limited companies must pay Corporation Tax on their profits. This includes trading income, investments, and capital gains.

Directors must:

Penalties for late or inaccurate filings can be severe and may escalate quickly.

🔸 VAT (Value Added Tax)

If the company’s taxable turnover exceeds £90,000 in a 12-month period, VAT registration is mandatory.

Responsibilities include:

Delays, errors, or underpayments can trigger investigations by HMRC.

🔸 PAYE and National insurance

Operating PAYE is essential if the company pays salaries, including to directors. 

Directors must:

Directors failing to run PAYE properly may face both company penalties and personal consequences.

🔸 Self-assessment and Personal Tax

Directors are also responsible for filing a Self-Assessment tax return each year. This includes:

Tax on dividends above £500 (2024/25 threshold) is due at 8.75%, 33.75%, or 39.35%, depending on your tax bracket.

🔸 HMRC Compliance checks

HMRC may open compliance checks to investigate potential tax misreporting or avoidance. These checks may span:

If non-compliance is found, directors may be subject to backdated payments, penalties, or prosecution for fraud.

What are your responsibilities during financial trouble or insolvency

When a company becomes insolvent (unable to pay debts when due), directors’ duties shift. The priority becomes protecting creditors rather than shareholders.

What directors must do:

What are the potential consequences?

❗Even if directors resign, they can still be held accountable for actions taken while in office.

How can you resign as a company director

Resignation must be formally recorded with Companies House. However, responsibilities don’t disappear the moment you step down.

A resigning director may still be liable for:

Before resigning, there are few steps to complete:

Summary: What every UK director should know

✔ You must act within the powers granted by the company’s constitution.

✔ Promote the company’s long-term success while being fair to stakeholders.

✔ File all company accounts, tax returns, and confirmation statements on time.

✔ Avoid conflicts of interest and be transparent in your dealings.

✔ Maintain accurate company records and cooperate with compliance checks.

✔ Understand that your responsibilities don’t end immediately upon resignation.

✔ Seek legal or financial advice when you’re unsure about any obligations.

How ANNA can help you register a company and manage obligations as a company director

If you're just getting started and planning to become a director of a limited company, ANNA offers a straightforward, cost-effective way to incorporate your business and handle all necessary paperwork.

ANNA provides three tiers of business registration support:

🔸Why this matters for directors:

As a director, it’s your legal responsibility to:

ANNA ensures you stay compliant by managing these administrative burdens for you. 

If you need to appoint or remove directors, the Director Management Service (£29.90) updates Companies House records and keeps everything in line with UK company law.

At ANNA, you’ll  also get:

* All services are optional and can be added at checkout.

🔸 Starting a company with multiple directors

ANNA supports incorporation with up to four directors. If your business setup involves multiple people managing operations, this flexibility allows you to register all relevant directors at once. Each director will need to provide basic identity information (name, DOB, nationality, occupation, proof of ID, and address).

ANNA handles this efficiently, allowing everyone to access the company’s business account too. It’s worth noting that if you register a limited company, you are legally required to open a separate business bank account, and ANNA provides this alongside company formation at no extra cost.

🔸Virtual office address for directors

To protect your privacy, directors can choose to register the company with a virtual office address (from £15/month). 

Provided by Hoxton Mix, this service:

This is especially useful for sole directors working from home who want a more professional presence.

🔸Tax and director responsibilities made simple

ANNA doesn’t just help you incorporate, but also keep you compliant. Directors are legally responsible for:

ANNA’s tax add-on service (from £3/month) ensures these tasks are handled accurately and on time. Our systems are built to minimise manual admin and provide peace of mind.

No matter if you're launching solo or with a co-founder, ANNA ensures your legal responsibilities as a company director are met from day one.

You can get started in just three steps:

FAQ

1. Are formation costs tax-deductible?

Good question. The cost of forming the company is generally treated as a capital expense, not tax-deductible.

However, ongoing services related to maintaining compliance, like confirmation statements, statutory record keeping, and shareholder meeting support, are considered trading expenses and are tax-deductible.

If you paid for the incorporation out of your own pocket, the company can reimburse you once trading begins. This is perfectly legal and considered best practice.

2. Do directors pay tax personally?

Yes. Directors must file a personal Self-Assessment tax return reporting income from salary, dividends, and benefits.

3. Can a director be held personally liable for company debts?

Not usually, but exceptions include wrongful trading, personal guarantees, or fraud.

4. What happens if a director fails to file a confirmation statement?

Companies House can strike the company off the register, and the director may face penalties.

5. How long do responsibilities last after resignation?

Directors can remain liable for actions taken during their appointment, even after resigning.

6. Can directors go to prison?

Yes. Fraud, embezzlement, and serious breaches of duty can result in criminal prosecution and imprisonment.