Payroll for a director-only limited company

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Most one-person limited companies pay the director a salary as well as dividends. The salary goes through a PAYE payroll like anyone else's, but three rules work differently for a director.

Checked against GOV.UK guidance on 16 October 2026. General information, not advice.

Do you need a payroll at all?

If the company pays the director a salary, it registers as an employer with HMRC and reports each payment through Real Time Information. The Full Payment Submission goes on or before payday, and PAYE and National Insurance reach HMRC by the 22nd if paying electronically, or the 19th by post. A director paid only dividends isn't on the payroll, but the company may still be registered from an earlier year.

The three director rules

National Insurance is worked out yearly

A director's National Insurance uses an annual earnings period, not each pay period, so the total for the year is what counts. A director appointed part-way through the year gets a pro-rata earnings period.

No Employment Allowance for a single director

The Employment Allowance cuts an employer's National Insurance bill by up to £10,500 a year. A limited company can't claim it if its only employee paid above the secondary threshold is a single director. Taking on someone else paid above the threshold restores it.

Pensions

A company whose only staff are directors without employment contracts usually has no automatic enrolment duties. It should still tell The Pensions Regulator if it receives a letter. Check the position on The Pensions Regulator's site before relying on it.

Salary and dividends

The usual pattern is a modest salary through the payroll and the rest as dividends from post-tax profit. Where to set the salary depends on the National Insurance thresholds, the Employment Allowance rule above, and the director's other income. Current rates are on our rates page. It's a calculation worth redoing every April.

The year-end paperwork

P60

To the director by 31 May.

P11D and P11D(b)

By 6 July, if the company provided taxable benefits.

Self Assessment

Dividends above the allowance usually mean a personal tax return. See Self Assessment.

Sources

GOV.UK: Single director companies and Employment Allowance, NIM06545, Reporting payroll to HMRC.

Run it for you

We run director-only payrolls for companies, and director payrolls across a practice's client book. See payroll services.