Last updated: 14 October 2026
If your spouse resigns as a director, do you become liable for the company’s debts?
No, not simply because they resign. A limited company is responsible for its own debts, and directors aren’t usually personally liable, however many there are. You could be personally liable if you’ve signed a personal guarantee, if you trade while the company is insolvent (wrongful trading), if there’s fraud, or if you’ve taken an overdrawn director’s loan. Your spouse may also stay liable for things that happened while they were a director.
When directors can be personally liable
| Situation | Personal liability? |
| Ordinary trade debts | No, the company owes them |
| Personal guarantee (bank loan, lease, supplier) | Yes, for the guarantor |
| Overdrawn director’s loan account | Yes, owed to the company and claimable by a liquidator |
| Wrongful or fraudulent trading | Possibly, through the courts |
| Unpaid PAYE or VAT through deliberate conduct | HMRC can issue a personal liability notice |
| Bounce Back Loan misuse | Possibly |
What happens when a director resigns
- The company files form TM01 at Companies House within 14 days
- The remaining directors run the company
- A company must have at least one director who is a natural person
- If the resigning director is also a shareholder, they keep their shares unless they’re transferred
- Any personal guarantees given by the resigning director usually continue unless the lender releases them
Example
Anil and Priti were both directors of their café company. Priti resigns in 2026 to take another job. The company has a £40,000 bank loan that both personally guaranteed. Priti’s resignation doesn’t end her guarantee; the bank must agree to release her. Anil is now the sole director and must make sure the company can pay its debts. If the company becomes insolvent and he keeps trading, he could be liable for wrongful trading.
Duties of the remaining director
- Act in the company’s interests and, when insolvency is likely, the creditors’ interests
- File accounts, confirmation statements and tax returns on time
- Keep proper accounting records
- Take advice early if the company can’t pay its debts
Joint liability for tax
HMRC can’t usually chase directors for company tax. Exceptions include joint and several liability notices where there’s tax avoidance, evasion or phoenixism, and personal liability notices for NIC where there’s neglect or fraud.
Spouses and family finances
If you’ve borrowed against your joint home to fund the company, that debt is personal. Directors’ loans to the company are unsecured unless otherwise agreed.
Common mistakes
- Assuming a resignation releases a personal guarantee
- Not filing TM01, so the resigning director still appears on the register
- Leaving one inexperienced director to run a struggling company without advice
- Clearing an overdrawn loan account by writing it off without considering the tax
If your spouse resigns, update the bank mandate, HMRC records and any supplier accounts too.
Frequently asked questions
Can my spouse stay a shareholder?
Yes, resigning as a director doesn’t affect shares.
Do I need a second director?
No, one director is enough for a private company.
Can a director resign if the company is in debt?
Yes, but they remain responsible for their actions while in office.
Will HMRC write to the resigning director?
Possibly, for earlier periods.
Related: directors’ liability for a dissolved company, the director’s loan tax charge and HMRC demands after a company closes.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with director responsibilities. See our limited company accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
