Seven Things Every Company Director Needs to Know, and Making Tax Digital
If you’re considering becoming a Company Director, there are a few key points you really need to know. Read our list of 7 duties all Company Directors need to follow in order to be successful. Plus, we continue our campaign to make everyone aware of HMRC’s Making Tax Digital project, ensuring sole traders and landlords know of the timeline for when they may be affected by the changes.
Seven Things Every Company Director Needs to Know
Becoming a company director comes with a fair bit of responsibility – and not just when things are going well. Whether you’re the hands-on type, more of a silent partner, or even directing behind the scenes, all company directors have legal duties under the Companies Act 2006.
Here’s a straightforward look at seven key duties every director should be aware of:
1. Follow the company’s constitution
Your first duty is to stick to the rules set out in the company’s constitution and articles of association. These documents outline how the company should be run and what powers you have as a director. If you go outside those powers, you could be held personally responsible.
2. Promote the success of the company
You’re expected to act in the company’s best interests and promote its success. But that doesn’t just mean chasing profits. You also need to think about:
- Long-term consequences of decisions.
- The interests of employees.
- Relationships with suppliers and customers.
- The community and environment.
- The company’s reputation.
- Fairness to all shareholders or members.
And if the company becomes insolvent? Your focus legally shifts to protecting the interests of creditors.
3. Use your own independent judgment
It’s fine to take advice, but at the end of the day, you’re responsible for the decisions you make. You must use your own judgment and avoid simply doing what someone else tells you – even if they’re another director or major shareholder.
4. Exercise reasonable care, skill and diligence
You’re expected to do the job to the best of your ability. The law takes into account your personal knowledge and experience. So, if you’re a qualified professional (like an accountant or engineer), you’ll be expected to apply the skill and experience you have in your role as a director.
5. Avoid conflicts of interest
You need to steer clear of situations where your personal interests (or those of family members) might clash with your responsibilities to the company. This includes things like:
- Personal financial interests.
- Competing businesses.
- Inside knowledge you gained as a director.
If there’s even a chance of a conflict, it should be declared to the board – and any process set out in the company’s articles of association should be followed. This duty even continues after you’ve stepped down as a director.
6. Don’t accept benefits from third parties
You mustn’t accept perks or gifts from others that could influence your decisions as a director. The only exception might be something like reasonable corporate hospitality, and even then, only if there’s clearly no conflict of interest.
7. Declare any interest in company transactions
If there’s a chance you could personally benefit from something the company is doing (say, awarding a contract to a business owned by a relative), you must declare it. Letting the board know is essential, and in some cases, you may need to step back from decisions altogether.
Anything else?
There are other general duties to keep in mind besides those listed above. Maintaining confidentiality, not misusing company property, and always acting in good faith would be some further examples.
Being a director isn’t just about a title – it carries real legal responsibilities. If you’re ever unsure about your role or what’s expected of you, please feel free to speak to us at any time. A quick check now could save a big headache later.
Making Tax Digital for Income Tax – Are You Ready?
The government is pressing ahead with Making Tax Digital (MTD) for Income Tax – and it will affect many sole traders and landlords over the next few years.
Here’s what’s changing, when it’s changing, and how to get ready.
What is MTD for Income Tax?
Under MTD, sole traders and landlords whose “qualifying income” is above a certain level will need to:
- Keep digital business records.
- Use HMRC-approved software to send quarterly updates.
- Submit an annual final declaration.
“Qualifying income” basically refers to your total gross income from self-employment and property in a tax year, before expenses.
Who Will Be Affected and When?
HMRC have released statistics showing how many will be impacted by the introduction of MTD. Their figures are based on the 2023 to 2024 tax year.
The rollout is happening in stages, as follows:
| Qualifying Income | When MTD Becomes Mandatory | Number of People Affected |
| Over £50,000 | 6 April 2026 | Around 864,000 |
| £30,000 – £50,000 | 6 April 2027 | Around 1,077,000 |
| £20,000 – £30,000 | 6 April 2028 | Around 975,000 |
In total, about 2.9 million individuals will eventually need to follow the MTD rules.
Are You Ready?
The requirement to send quarterly updates means that you will need to keep up to date with your bookkeeping. Doing it all after the year-end will no longer be an option.
The need to use software will also mean that keeping paper records of your income and expenses will no longer be sufficient.
HMRC’s latest figures show that software use is common but not universal:
- Over £50,000 income: 63% already use commercial software.
- £30,000–£50,000 income: 49% use software.
- £20,000–£30,000 income: 48% use software.
What You Need to Do Now
- Check your qualifying income – add up your total gross self-employment and property income for the year.
- Review your record-keeping – paper records won’t be allowed.
- Consider software options – cloud accounting tools make quarterly submissions easier and keep you compliant.
Don’t wait until the deadline. Switching to digital record-keeping now means you can get comfortable with the software and avoid last-minute headaches.
If you’d like some personalised advice, please get in touch with us. We can help you choose the right software and show you how to use it. If you’d prefer to stay away from software altogether, we can also provide a bookkeeping service.
Whatever the case, we’ll work with you to make the transition smooth and stress-free so when MTD arrives, you’re already ahead of the game.