How long do I have to register my new company for corporation tax?

Three months from the start of your accounting period, which for a contractor is normally the date the company starts to trade. HMRC's wording is that you must tell them within three months of starting your tax accounting period if the company is within the charge of corporation tax and is now active. You do this through the company's business tax account using the Companies House registration number and the date trading began. It is the easiest of the early deadlines to miss, because nothing prompts you.

Do I have to run payroll in the first 30 days?

Only if you intend to pay yourself a salary in that period, but the registration has to come first. You must register as an employer before the first payday, and the employer PAYE reference can take up to fifteen working days to arrive, so apply as soon as the company exists. You cannot register more than two months before you start paying people. Most first year contractors set a monthly salary and run the first payroll once the reference lands.

Should I register for VAT before my first invoice?

Decide before the invoice, even if the answer is no. Registration is compulsory once VAT taxable turnover passes £90,000 in any rolling twelve months or is expected to in the next thirty days, and a full time day rate of around £375 reaches that inside a year. Many contractors register voluntarily from the start, because a VAT registered end client recovers the VAT charged and the input VAT on your own costs comes back. Registering later means either re-invoicing work already billed or absorbing the VAT yourself.

When can I take my first dividend?

Once there is distributable profit, which means after setting aside corporation tax and any VAT collected. Corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief between at an effective rate of about 26.5%. In month one the cash in the account is mostly money owed elsewhere. Every distribution needs a board minute and a dividend voucher dated before the money moves, or the payment risks being treated as a director's loan rather than a dividend.

Do I need to register for self assessment as a new director?

If you are not already in self assessment, you register by 5 October following the end of the tax year in which you first have income to declare, which for a personal service company contractor normally means the dividends. Check whether a return is actually due first, because the trigger depends on your total income and how it has been taxed. Register in good time rather than at the deadline, since the unique taxpayer reference takes a while to arrive.

Does Making Tax Digital apply to my contracting company?

Not to the company. Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income over £50,000 from 6 April 2026, £30,000 from 6 April 2027 and £20,000 from 6 April 2028. A director's salary and dividends are not qualifying income, so a typical personal service company contractor is outside it. Bookkeeping software is still worth setting up in the first month, for the VAT returns, the bank feed and the expense records.

Contractor Accounting Basics

Your First Outside IR35 Contract: the First 30 Days After Incorporating

Published 12 June 2026Updated 27 September 2026Contractor Tax Accountants Editorial Team5 min read

Incorporation takes a day. The month after it carries the deadlines that matter: tell HMRC the company is active within three months, register for PAYE before the first payday, settle the VAT question before the first invoice, and open the business bank account first because it is the slowest step of all.

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Figures checked against primary sources (HMRC, legislation.gov.uk, HMRC IR35 guidance) in 27 September 2026.

Key takeaways

Tell HMRC the company is active within three months of starting your accounting period, register for PAYE before the first payday, and decide on VAT before the first invoice leaves.
Start the slow items on day 0: the business bank account and the employer PAYE reference both take days or weeks, and the first invoice cannot wait for them.
Company income belongs to the company from the moment it arises, so no client payment should ever land in a personal account.
A dividend can only come out of profit after corporation tax and VAT are set aside, which is rarely the case in the first month.
Keep a short working practices note on file from day one, plus the client's status determination statement where one is issued, because the outside IR35 position is judged on how the engagement actually runs.

Close-up of hands typing on a sleek laptop, ideal for freelance work. — Photo: Anna Shvets / Pexels

Incorporation is the quick part. The thirty days after it carry the deadlines. You must tell HMRC the company is active within three months of the start of its accounting period, register as an employer before the first payday, and settle the VAT question before the first invoice goes out. Two of those depend on things that arrive slowly: the business bank account and the employer PAYE reference, which can take up to fifteen working days. So the order below starts with the slow items rather than the urgent ones.

What are the hard deadlines?

Four dates matter in the first month of trading. Corporation tax: tell HMRC the company is active within three months of starting your accounting period. PAYE: register before the first payday, and no more than two months before it. VAT: register once turnover has passed £90,000 in any rolling twelve months, or within thirty days of the point at which you expect to pass it in the next thirty days. Self assessment: by 5 October following the tax year in which you first have income to declare, if you are not in it already.

Everything else in the sequence is about not losing money or time rather than about a statutory date.

What should you do on day 0?

Start the two things you cannot rush. Apply for the business bank account, because identity checks on a brand new company take days and the agency will not pay into a personal account. Apply for the employer PAYE scheme if you intend to take a salary. Both then run in the background while you deal with the rest.

The formation mechanics themselves, share structure, registered office and accounting reference date, are covered in the guide to setting up a limited company for contracting.

When do you decide on VAT?

In the first week, before any invoice. Most contractor services are standard rated at 20%. Registration is compulsory above £90,000 of VAT taxable turnover in any rolling twelve months, a threshold frozen since 1 April 2024, and a full time day rate of around £375 reaches it inside the first year. Voluntary registration from the start is common, because the end client is usually VAT registered and recovers what you charge, so your invoice costs them nothing while you recover VAT on accountancy, insurance, equipment and software.

The Flat Rate Scheme is the part people get wrong. A limited cost trader, one spending less than 2% of turnover or less than £1,000 a year on goods, pays a flat rate of 16.5%, which removes most of the benefit for a labour only contractor, and the test is applied every VAT period. The limited cost trader rules and the VAT registration guide set out the comparison to run before choosing a scheme.

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What has to be in place before the first invoice?

The company incorporated, the bank account open, the VAT decision made, the insurances held, and the contract signed after review. Agencies and clients normally require professional indemnity and public liability cover, and a placement can be pulled if the certificates are not supplied before the start date.

On the paperwork: if the end client is medium or large it must issue a status determination statement, and you keep it on file with the reasons it gives. If the client is small, no statement is issued and the company assesses its own status. Either way, keep a short note of how the engagement actually runs, who directs the work, whether a substitute would genuinely be accepted, who sets the hours. The written terms and the working practices have to agree, because a tribunal looks at both, and a CEST result on its own does not settle the question. The clauses worth checking are in the IR35 contract review checklist.

The invoice itself needs the company name, registered number and registered office, your VAT number if registered, a unique invoice number, the client or agency details and the date of supply. Agree the payment terms in writing before the first one goes out, because thirty day terms sitting behind a monthly agency cycle can mean an eight week wait for the first payment.

When can you take money out?

Salary once the PAYE reference has arrived and payroll has been run. Dividends only out of profit after corporation tax, which runs at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief between producing an effective rate of about 26.5%. VAT collected is never yours. In month one the balance is mostly money set aside for other people, and drawing it creates a director's loan rather than a dividend.

Every dividend needs a board minute and a voucher dated before the payment is made. The salary level is a separate decision and turns on whether the company can claim the Employment Allowance, which a single director company with no other employees cannot. The framework is in the salary and dividend split guide. Set the level before the first payroll run, not after it.

What is the day 0 to day 30 order?

Day 0: apply for the business bank account and the employer PAYE scheme. Both are slow.
Day 1 to 3: tell HMRC the company is active for corporation tax. Three months is the deadline, the first week is the sensible time.
Day 1 to 7: make the VAT decision and submit the application if you are registering.
Day 3 to 7: arrange professional indemnity and public liability cover and send the certificates to the agency.
Day 3 to 10: contract reviewed, status determination statement filed, working practices note started.
Day 7 to 14: bookkeeping software set up with the bank feed connected and receipt capture switched on. Log every expense with its business purpose as it happens.
Day 14: first invoice raised with the full company details and the agreed payment terms.
Day 14 to 30: first payroll run once the PAYE reference arrives. Employer pension contribution set up, since it is deductible against corporation tax and carries no National Insurance.
Day 30: reconcile the month, set aside the corporation tax and the VAT, and only then look at a first dividend.
Before 5 October following the tax year: register for self assessment if you are not already in it.

What goes wrong most often?

Three things. The bank account is left until the invoice is due, so the first payment lands somewhere it should not. The PAYE registration is left until the salary is wanted, so the first payroll slips a month. And the whole balance is drawn in month two, leaving nothing for a corporation tax bill that falls nine months and one day after the year end. A specialist reviews the sequence with you before the first invoice, which takes less unwinding than any of the three.

Not sure where you stand on IR35?

Book a free call with a specialist contractor accountant. We will review your contract, your working practices and your current structure. Plain English, no jargon.

Frequently asked questions

How long do I have to register my new company for corporation tax?: Three months from the start of your accounting period, which for a contractor is normally the date the company starts to trade. HMRC's wording is that you must tell them within three months of starting your tax accounting period if the company is within the charge of corporation tax and is now active. You do this through the company's business tax account using the Companies House registration number and the date trading began. It is the easiest of the early deadlines to miss, because nothing prompts you.
Do I have to run payroll in the first 30 days?: Only if you intend to pay yourself a salary in that period, but the registration has to come first. You must register as an employer before the first payday, and the employer PAYE reference can take up to fifteen working days to arrive, so apply as soon as the company exists. You cannot register more than two months before you start paying people. Most first year contractors set a monthly salary and run the first payroll once the reference lands.
Should I register for VAT before my first invoice?: Decide before the invoice, even if the answer is no. Registration is compulsory once VAT taxable turnover passes £90,000 in any rolling twelve months or is expected to in the next thirty days, and a full time day rate of around £375 reaches that inside a year. Many contractors register voluntarily from the start, because a VAT registered end client recovers the VAT charged and the input VAT on your own costs comes back. Registering later means either re-invoicing work already billed or absorbing the VAT yourself.
When can I take my first dividend?: Once there is distributable profit, which means after setting aside corporation tax and any VAT collected. Corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief between at an effective rate of about 26.5%. In month one the cash in the account is mostly money owed elsewhere. Every distribution needs a board minute and a dividend voucher dated before the money moves, or the payment risks being treated as a director's loan rather than a dividend.
Do I need to register for self assessment as a new director?: If you are not already in self assessment, you register by 5 October following the end of the tax year in which you first have income to declare, which for a personal service company contractor normally means the dividends. Check whether a return is actually due first, because the trigger depends on your total income and how it has been taxed. Register in good time rather than at the deadline, since the unique taxpayer reference takes a while to arrive.
Does Making Tax Digital apply to my contracting company?: Not to the company. Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income over £50,000 from 6 April 2026, £30,000 from 6 April 2027 and £20,000 from 6 April 2028. A director's salary and dividends are not qualifying income, so a typical personal service company contractor is outside it. Bookkeeping software is still worth setting up in the first month, for the VAT returns, the bank feed and the expense records.