Knowledge Centre Category: Companies Limited by Shares

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Research and Development (R&D) Tax Relief

R&D tax relief is a government incentive that allows companies to claim an enhanced tax deduction — or in some cases a cash payment — for qualifying expenditure on innovative projects. Green Accountancy advises companies on eligibility, identifying qualifying R&D activity and making correct, compliant claims to HMRC.

National Insurance Contributions (NICs)

National Insurance contributions are payments made by employees, employers and the self-employed that fund state benefits including the State Pension.

VAT (Value Added Tax)

VAT is a consumption tax charged on most goods and services in the UK, currently at a standard rate of 20%, which VAT-registered businesses collect on behalf of HMRC and offset against the VAT they have paid on their own purchases. Green Accountancy prepares and submits VAT returns, and also offers VAT audit and correction services for businesses that need to review or amend their VAT position.

Unapproved Share Options

Unapproved share options are share options that fall outside HMRC-approved schemes such as EMI, meaning they do not benefit from the same tax advantages and are typically subject to income tax and National Insurance when exercised.

Owner-Manager

An owner-manager is an individual who both owns and runs their own limited company, typically drawing income through a combination of salary and dividends. Green Accountancy regularly advises owner-managers on the most tax-efficient way to structure their remuneration given current tax rates and their personal circumstances.

Dividend

A dividend is a payment made by a company to its shareholders from post-tax profits, and is a common way for owner-managers to draw income from their business. Unlike salary, dividends are not subject to National Insurance, though they must only be paid when sufficient profit reserves exist.

Ordinary Shares

Ordinary shares are the standard class of share in a limited company, carrying voting rights and entitlement to dividends from profits after any preference shareholders have been paid. Under EMI and EIS schemes, shares must be ordinary shares with no preferential rights to dividends or assets in order to qualify.

Dividend Allowance

The dividend allowance is the amount of dividend income an individual can receive tax-free each year, currently £500 for the 2026/27 tax year. Any dividend income above this amount is taxed at dividend tax rates through self-assessment.

Dividend Tax Rates

In 2026/27 dividends are taxed at 10.75% (basic rate); 35.75% (higher rate) and 39.35% (additional rate). Dividends are taxed "last" i.e. all other income sources are set against personal allowances and tax bands, with dividends taxed at the highest rate of tax that you pay.

Enterprise Management Incentive (EMI)

An Enterprise Management Incentive scheme is a government-approved share option arrangement designed to help smaller trading companies attract, motivate and retain key staff in a highly tax-efficient way. Green Accountancy advises companies on EMI scheme eligibility, setup and the associated annual HMRC reporting obligations.