Straight answer: yes, you can invoice your own company as a director, but only for work that’s separate from your director duties, and only if you handle the conflict of interest, the tax status, and the paperwork. Get any of those three wrong and you’re not saving tax, you’re building a problem that surfaces the day HMRC, a co-director, or an accountant with a spine finally looks at your books.
The short version, unpacked
Being a director and invoicing your company are two completely different legal relationships. As a director you have statutory duties under the Companies Act 2006, you’re usually not an employee, and you’re normally paid through a mix of salary and dividends. Invoicing is what a supplier does. The moment you invoice your own company for something, you’re telling HMRC “I did this as a separate trader or through a separate company, not as part of my job running this place.” That claim has to be true, or the whole arrangement falls apart under any scrutiny.
I’ve watched this go both ways in my own client work. One director I advised had it exactly right: she ran the main business and also did freelance video editing for it through a second limited company, invoiced, VAT charged where it applied, board minute on file. Another director I know did the opposite: he invoiced his own company for “consultancy” that was, in reality, just him doing his normal job, and used it to pull cash out faster than dividends allowed. One of those setups survived an HMRC compliance check. The other didn’t.
When it’s fine
There are legitimate, common situations where a director invoices their own company:
- You’re a non-executive director billing a day rate for NED work through your own personal service company, common in the £500 to £1,500 a day range depending on sector and company size.
- You run a separate trade, say you’re a director of a retail company but also a freelance developer, and you build the company’s website as a distinct paid project outside your director role.
- You’ve been brought in as an interim director on a fixed-term contract and invoice monthly rather than sit on payroll.
- You provide a specific, one-off service that’s clearly outside your normal duties, such as local SEO work you did for a portfolio company before you formally joined its board, similar to the kind of project work I cover when I talk about how local SEO increases business profits, where the deliverable is a defined project with a start and end date, not an ongoing job.
The common thread: the work is separable, has its own scope, and would exist whether or not you were a director.
What the Companies Act says about this
Section 175 of the Companies Act 2006 puts a duty on directors to avoid situations where they have, or could have, a conflict of interest with the company. Invoicing your own company is exactly that kind of situation, because you’re on both sides of the transaction: deciding to award the work and receiving the payment for it.
Most small companies run on Model Articles, and regulation 14 lets a director have an interest in a contract with the company as long as it’s disclosed to the other directors first. If you’re the sole director, this feels academic since there’s no one else to disclose it to, but you should still record it. Write a director’s decision, dated, stating what the work is, what it costs, why it’s separate from your role, and file it with your company records. It takes ten minutes and it’s the single most useful piece of paper you can produce if anyone ever questions the arrangement, whether that’s HMRC, a future investor, or a co-director during a falling-out.
The IR35 and employment status trap
This is where most guides on this topic go quiet, and it’s the part that catches people out. If you invoice your own company through a personal service company, HMRC can apply the same off-payroll working tests it uses for any contractor: control, substitution, and mutuality of obligation. If the company controls how, when and where you do the work, if you can’t send someone else to do it for you, and if there’s an ongoing expectation of more work, that invoice starts to look a lot like disguised salary, whatever you’ve called it on paper.
For medium and large companies, the off-payroll rules that came in from April 2021 put the responsibility for assessing this on the company, not on you. For small companies (broadly, turnover under £10.2 million, fewer than 50 employees, or balance sheet under £5.1 million), the old rules still apply and the responsibility sits with the person providing the service. Either way, if you’re both the director awarding the work and the person invoicing for it, you can’t hide behind “the client decided my status,” because you are the client.
The uncomfortable bit nobody likes saying out loud: if you’re the sole or majority shareholder invoicing your own company, HMRC doesn’t need to prove much to argue the arrangement is artificial. You control both ends. There’s no independent client relationship to point to. The “separate business” story only holds up if you can show other clients, your own equipment, your own risk, and different terms of work. If this is your only source of income and the “invoice” happens every month like clockwork for the same tasks you’d otherwise be doing as director, it isn’t consultancy, it’s payroll wearing a disguise, and a decent tax inspector will spot it in about four minutes.
A real example from my own setup
I run more than one limited company, and for a period I sat as a director on both. One of them needed a full rebuild of its video content for a product launch, scripting, filming, editing, the lot. That’s specialist work that falls squarely under the kind of roles I’ve written about when covering the job titles that sit under video marketing, and it had a clear brief, a fixed fee of £2,400, and a delivery date. Rather than pay myself more director’s remuneration for it, I invoiced the company through my consultancy, charged VAT because I’m VAT registered, and the company treated it as a supplier cost in its accounts, fully deductible against corporation tax.
What made it clean wasn’t the invoice itself, it was everything around it. There was a written brief. There was a fixed price agreed before the work started, not decided afterwards to suit tax planning. The invoice was paid into my separate business account rather than moved between internal ledgers, which is one of the reasons I bang on to clients about running money through a proper business account with clean online banking rather than a personal account doubling as a company till. And the company could point to a genuine deliverable it received, not a vague monthly retainer for “consulting.”
Step-by-step: doing it
- Check your articles. Confirm what your company’s articles say about directors having an interest in contracts, and whether disclosure or board approval is required.
- Define the work in writing before you start. A scope, a price, a deadline. No brief, no invoice.
- Record the decision. A short director’s minute or written resolution noting the arrangement, the amount, and the reason it’s separate from your director role.
- Confirm your status. Use HMRC’s Check Employment Status for Tax (CEST) tool if there’s any doubt, and keep the result on file.
- Invoice. Full invoice with your trading name, invoice number, date, description of work, amount, VAT if you’re registered (VAT registration kicks in once your taxable turnover passes £90,000 in a 12-month period), and payment terms.
- Get paid into the right account. The invoice should be settled into your own trading account, not just journaled internally between the same set of books.
- Declare it correctly. Report the income through self-assessment or your other company’s corporation tax return, not through the payslip of your director role.
- Keep evidence you’re a genuine trader. Other clients, your own tools, your own marketing, anything that shows this isn’t the company’s only source of “external” spend that happens to land back with you.
The bits that trip people up
VAT is a common one. If you’re VAT registered and you invoice your own company, you charge VAT as normal, and the company reclaims it if it’s also VAT registered. If your company isn’t VAT registered, that VAT becomes a real cost to it, which is worth factoring into whether the arrangement is worth doing at all.
Another one: don’t confuse “invoicing yourself” with dressing up a bad decision as a deductible expense. I’ve seen directors try to invoice their own company for things that were really just poor spending decisions after the fact, in the same way people justify a bad purchase like when they buy an email list and hope to write it off as marketing, something I’ve written about at length because buying an email list rarely does what people hope, and trying to invoice or expense your way out of a bad call afterwards just adds a tax problem to the original mistake. An invoice needs a real, agreed, pre-priced piece of work behind it, not a story you built afterwards to explain a payment.
And be honest with yourself about what counts as “separate.” Setting up your own WhatsApp Business number to handle the company’s customer enquiries, the sort of thing I walk through in my guide on setting up WhatsApp Business for a small company, is normal director-level operational work. It’s not a service you can invoice for on top of your director’s pay just because it took a few hours to configure. The test isn’t “did this take effort,” it’s “would the company have needed to hire an outside person to do this if I weren’t a director.”
When you shouldn’t do this at all
If you’re the sole shareholder and sole director, and every penny you take out of the business one way or another ends up in your own pocket regardless of the label, ask yourself honestly whether the invoice route saves you anything once you account for the extra accountancy fees, the VAT complexity, and the audit trail you now have to maintain. Often the honest answer is that a standard salary and dividend split, kept simple, costs less in time and risk than an invoicing structure built to shave a small amount off your tax bill.
If there are other shareholders or a co-director involved, be even more careful. Paying yourself via invoices rather than dividends changes how much cash you personally extract relative to your shareholding, and that’s precisely the kind of thing that turns into a bitter dispute two years later when a co-founder does the maths on what you’ve taken out of the business compared to them. I’ve sat across the table from directors mid-fallout where an old, badly documented invoice from years earlier became Exhibit A in an argument about trust. Document everything, or don’t do it.
Frequently asked questions
Can a sole director invoice their own limited company?
Yes, but it needs to be for separate work with its own scope and price, backed by a written record of the decision, because as sole director you’re on both sides of the transaction and there’s no independent check on the arrangement other than the paperwork you create yourself.
Is invoicing your own company a form of tax evasion?
Not automatically. It’s a legitimate structure when the work is real, separate, and priced fairly. It becomes a problem when the “invoice” is just your normal director duties relabelled to reduce tax or National Insurance, which HMRC treats as disguised remuneration if the substance doesn’t match the paperwork.
Do I need a separate company or can I invoice as a sole trader?
Either works. You can invoice your main company as a sole trader for freelance work, or through a second limited company. What matters for tax and legal purposes isn’t the vehicle, it’s whether the work is distinct from your role as director and whether you can show the arrangement stands up to an employment status test.
What’s the difference between invoicing my company and just taking a dividend?
A dividend is a distribution of profit to shareholders based on shareholding and doesn’t relate to specific work done. An invoice is payment for a defined service, is deductible against corporation tax as a business expense, but comes with VAT, IR35, and conflict of interest rules that dividends don’t carry, so it suits one-off project work far better than it suits your ongoing salary.
