UK Small Business Compliance: The Complete Guide

By Polar Small Business Manager – last reviewed October 2026

Running a business in the UK comes with a long list of legal and administrative duties, and the rules keep changing. This guide puts them in one place, in plain English, so you can see what applies to you, what the deadlines are and where to go next. Whether you are a sole trader about to send your first invoice or a limited company director with a team, start here and follow the links to the detailed guides.

This guide is general information, not legal or tax advice. Rules, thresholds and fees change, so always check the linked GOV.UK pages for the current position, and speak to an accountant or solicitor about your own circumstances.

Your compliance checklist at a glance

Use this as a quick scan. Each item is explained further down the page.

• Registered correctly – as a sole trader with HMRC, or as a limited company with Companies House and HMRC.
• Taxes set up – Self Assessment or Corporation Tax, plus VAT and PAYE if they apply to you.
• Companies House up to date – confirmation statement, annual accounts, registered office and people with significant control.
• Identity verified – directors and people with significant control now need to verify their identity.
• Data protection covered – ICO fee paid where required, privacy notice published, a plan for breaches and requests.
• Employer duties met – right to work checks, written contracts, payroll, workplace pension and employers’ liability insurance.
• Insured and secure – the right cover for your risks and basic cyber security in place.
• Records kept – the right documents, for the right length of time, stored safely.

1. Registering your business

Your first compliance decision is the legal structure, because it decides which rules apply to you.

Sole trader. You are self-employed and personally responsible for the business. You register with HMRC for Self Assessment, and there is no Companies House filing. If your only income is small side earnings, you may be able to use the trading allowance – see our guide to the side hustle tax rules and the £1,000 trading allowance.

Limited company. The company is a separate legal entity. You register it with Companies House, then with HMRC for Corporation Tax, and you take on ongoing filing duties as a director. Our guide on how to register a limited company walks through the steps.

Not sure which suits you? Read sole trader vs limited company, or follow our full business setup checklist from start to finish.

2. Companies House duties for limited companies

If you run a limited company, these are the recurring duties Companies House expects you to meet.

Confirmation statement. You must confirm your company’s key details are correct at least once every 12 months. It is a short filing, but missing it can lead to penalties and, ultimately, the company being struck off.

Annual accounts. Private limited companies generally have to file accounts within nine months of the end of their financial year. Your first accounts have a different deadline, which runs from the date you incorporated.

Registered office and email. Your registered office must be a real UK address where official documents can be delivered, and you must give Companies House an appropriate registered email address. If you work from home and do not want your address on the public register, read our guide to business addresses in the UK.

Directors, shareholders and PSCs. You must keep information about directors and people with significant control (PSCs) accurate and tell Companies House about changes within the deadline for that type of change. Check the current filing process and do not assume every change has the same deadline.

Identity verification. Identity verification is now a legal requirement for directors and people with significant control, and existing officers are being brought in during a transition period. Read what Companies House identity verification means for you so you are not caught out.

Changes to accounts filing. The way small companies file accounts is changing, including a move to software-only filing. See what small companies need to prepare for and plan ahead.

Late filing penalties. Automatic penalties for late accounts increase the longer you wait, and they can be doubled if you are late two years running. Filing on time is far cheaper than fixing it afterwards.

3. Tax and HMRC

Self Assessment (sole traders). If you need to register for Self Assessment, the usual notification deadline is 5 October following the relevant tax year. Check the trading allowance, other reasons to register and any exceptions. The online tax return and payment deadline is normally 31 January, with payments on account on 31 January and 31 July for many people.

Making Tax Digital for Income Tax. Digital record keeping and quarterly updates are being phased in for sole traders and landlords, starting with higher income bands and widening over the next few years. Check the current income thresholds on GOV.UK and make sure your bookkeeping software is ready.

Corporation Tax (limited companies). You must tell HMRC when your company starts trading, pay any Corporation Tax usually within nine months and one day of the end of the Corporation Tax accounting period, and file the company tax return within 12 months of that period’s end. Your first accounts and tax periods may differ.

VAT. You must check both taxable turnover over the previous rolling 12 months and whether it is expected to exceed the threshold in the next 30 days alone. Different notification and effective-date rules apply. You can also register voluntarily. Check the current threshold on GOV.UK, and set a reminder to review your turnover every month.

PAYE and payroll. Check whether you need to register as an employer and operate PAYE. Where payroll reporting applies, normally report pay to HMRC on or before payday.

Keeping on top of the monthly basics makes year end far less painful. Our month-end bookkeeping checklist is a good habit to build.

4. Data protection and GDPR

If you hold personal data – customer lists, email addresses, employee records, even CCTV footage – UK data protection law applies to you.

• Pay the ICO data protection fee unless you are exempt. Many small businesses are required to pay it, and the fee is easy to forget.
• Publish a privacy notice that says what data you collect, why, how long you keep it and who you share it with.
• Have a lawful basis for each type of processing, and only collect what you need.
• Be ready for requests. People can ask to see the data you hold about them, and you normally have one month to respond.
• Know your breach process. Some personal data breaches must be reported to the ICO within 72 hours of becoming aware of them.
• Handle complaints properly. Data protection complaint duties are now in force: provide a clear route, acknowledge complaints within 30 days, investigate appropriately and communicate the outcome. Read our guide to the 2026 complaint rules.

For the full picture, see GDPR for small businesses in the UK.

5. Employing people

Hiring your first employee brings a new set of duties.

• Right to work checks before the person starts, with records kept.
• A written statement of employment terms provided on or before their first day.
• Payroll and PAYE set up and reported to HMRC.
• Minimum wage and holiday pay at the correct legal rates, which are reviewed regularly.
• Workplace pension enrolment for eligible workers.
• Employers’ liability insurance, which is a legal requirement for most employers.

Employment law is also changing in phases. Keep up with our posts on employment law changes for small employers and the October 2026 employer checklist.

6. Insurance and cyber security

Beyond employers’ liability, the cover you need depends on what you do. Public liability, professional indemnity, product liability and cyber insurance are common choices, and customers or landlords may require some of them in their contracts. Our business insurance guide explains how to work out what is worth having.

Cyber security is now a compliance issue as well as a practical one, because a breach can trigger data protection duties. Start with the five steps the NCSC recommends for small businesses.

7. Record keeping and document management

Good records are your best protection in an enquiry or inspection.

• Limited companies should normally keep accounting records for at least six years.
• Sole traders should normally keep records for at least five years after the 31 January submission deadline for the relevant tax year.
• VAT records are generally kept for six years.

Keep contracts, invoices, receipts, payroll records, insurance certificates and statutory registers somewhere organised and backed up. Our guide to small business document management shows you how, and our free business templates give you a head start.

8. Your annual compliance calendar

A simple rhythm keeps most businesses on track.

Every month

• Run payroll and report to HMRC if you employ staff.
• Reconcile your bookkeeping and review your turnover against the VAT threshold.

Every quarter

• File VAT returns according to your assigned accounting periods, often quarterly.
• Send Making Tax Digital updates if they apply to you.
• Review your insurance, contracts and any upcoming deadlines.

Every year

• File your confirmation statement and annual accounts with Companies House.
• Pay Corporation Tax and file your company tax return.
• If you need to register for Self Assessment, check the usual 5 October notification deadline and the filing and payment dates that apply.
• Review your privacy notice, data protection fee and employment contracts.
• Check minimum wage and pension rates when they change each April.

9. Five common compliance mistakes

1. Missing a Companies House deadline because the filing reminder went to an old email address.
2. Registering for VAT late after quietly going over the threshold.
3. Using a home address on the public register without realising it can be changed.
4. Skipping the ICO fee or not having a privacy notice.
5. Not keeping records long enough, or storing them where nobody can find them.

Frequently asked questions

Do sole traders need to register with Companies House?

No. Where registration is required, sole traders register with HMRC for Self Assessment. Companies House is for limited companies and other registered entities.

What happens if I miss a Companies House deadline?

You can be fined automatically, and repeated or serious failures can lead to the company being struck off the register. File as soon as you realise, and contact Companies House if you have a genuine reason for the delay.

Do I need to pay the ICO data protection fee?

It depends on what you do with personal data and whether an exemption applies. Use the ICO’s self-assessment tool to check, and see our GDPR guide.

When should I register for VAT?

Check the previous rolling 12 months and the next 30 days alone against HMRC’s taxable-turnover rules. You can also register voluntarily; check timing and exceptions.

How long do I need to keep business records?

Company accounting and VAT records generally have six-year retention rules, measured under the relevant rules, with some cases requiring longer. Sole traders normally keep them for at least five years after the relevant 31 January deadline.

Do I need an accountant?

Not legally, but many owners find one pays for itself, particularly once you have a limited company, employees or VAT to manage.

More guides for the next step

Official sources

Legal and financial details checked against official guidance on 15 October 2026. Use the current guidance for your circumstances.

• GOV.UK: business setup
• Company accounts and tax deadlines
• VAT registration rules
• Self-employed registration
• ICO complaint duties
• Official finance and support finder

Keep the business connected

Explore Polar’s business tools and software, free templates and current plans.