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Self‑Employed vs Limited Company in 2026: Which Structure Is Best for You?

Mon, 23 Mar 2026 08:00:00 GMT

An updated guide on operating as self-employed or via a limited company, and the implications of incorporating or disincorporating.

Choosing whether to operate as a sole trader (self-employed) or run a limited company remains one of the biggest decisions for UK business owners, and the answer is no longer as clear‑cut as it once was. With dividend tax increases, corporation tax now tiered and the introduction of Making Tax Digital (MTD), the landscape in 2026 looks very different from a few years ago.

This updated guide explains the key differences, the latest tax rules, and what you need to consider if you’re thinking about incorporating or moving back to sole trader status.

The Core Differences: Self‑Employed vs Limited Company

Self‑Employed / Sole Trader

You and the business are the same legal entity
Profits are taxed via Self Assessment
Straightforward setup and minimal admin
Full personal liability for business debts

Limited Company

A separate legal entity
Directors run the company; shareholders own it
Profits are taxed at Corporation Tax rates
Owners typically extract profits via salary + dividends
More complex accounting and compliance
Limited liability protection

How Tax Has Shifted: Why the Gap Has Narrowed

Dividend Tax Rates Have Increased

Dividend tax has been rising over several years, reducing the traditional tax advantage of operating as a limited company. The tax‑free dividend allowance is now just £500, a big drop from the original £5,000. From 6 April 2026, the personal tax rates for dividends are:

Basic rate: 10.75%
Higher rate: 35.75%
Additional rate: 39.35%

This means the well‑known strategy of paying a small salary and taking the rest as dividends still works, but the savings are smaller than in the past.

Corporation Tax Is Now Tiered

Since 2023, Corporation Tax rates have been based on profit levels:

19% for profits under £50,000
25% for profits over £250,000
Marginal rate in between via tapering

Note that the thresholds above reduce if the company has associated companies.

While corporation tax is still generally lower than higher‑rate income tax, the gap has tightened.

National Insurance (NI) Savings Still Exist

Sole traders pay class 4 NI on profits above the threshold. Class 2 NI no longer needs to be paid.

Employees (including directors) and the company pay class 1 NI on salaries above the thresholds, although there can be a reduction in the company NI if the Employment Allowance is available.

No NI is payable on dividends.

Making Tax Digital (MTD): A Key Factor for Sole Traders

MTD for Income Tax Self Assessment starts from April 2026. Requirements include:

Digital record‑keeping
Quarterly submissions
End‑of‑period finalisation

This introduces new admin and potential software costs for self‑employed individuals.

The latest from HMRC is that companies will not be required to comply with MTD, although annual accounts and corporation tax returns still need to be filed electronically.

Incorporation

If you've been self-employed and would like to incorporate, you may trigger a capital gains event when transferring your business into a company, depending on your circumstances. Incorporation relief may be available which effectively defers the tax.

Professional guidance ensures you structure incorporation tax‑efficiently.

Disincorporation: Moving Back to Sole Trader

With higher dividend taxes and the narrowing of tax benefits, some business owners are now considering moving back to trading as a sole trader.

It's important that you get professional advice on this as you may need to pay tax at income tax rates when moving from a company to self-employed.

So… Which Structure Is Better in 2026?

There’s no universal answer, but recent tax changes mean the “best” structure depends more on your circumstances than ever.

A Limited Company Might Suit You If:

✔ Your profits are above £50,000

✔ You want to keep profits in the company

✔ You need limited liability protection

✔ You plan to grow, scale, or bring in shareholders

✔ Your industry expects a company structure

Self‑Employment Might Suit You If:

✔ Your profits are below £50,000

✔ You value simplicity

Final Thoughts

Recent tax changes have shifted the balance but haven’t eliminated the benefits of incorporation entirely. The “best” structure depends on:

Your profit level
Whether you reinvest or withdraw income
Your risk position
How much admin you’re comfortable with
Your long‑term goals

If you’re unsure, the best next step is a personalised review of your business finances and future plans. Get in touch if you'd like tailored advice on the right structure for your business in 2026.

Tax-Efficient Director Salaries & Dividends for 2026/27

Mon, 16 Mar 2026 08:00:10 GMT

How to structure your pay as a limited company director in the 2026/27 tax year.

For many small limited companies, especially those with one director-shareholder, the most tax‑efficient way to take income is usually a mix of salary and dividends. While the principles stay broadly the same each year, key thresholds do sometimes change, and those changes can affect everything from your personal tax bill to childcare entitlements. Below is an overview of what to consider for the 2026/27 tax year.

�� This is general guidance only. Your ideal setup may differ depending on your wider income, benefits, rental properties, pensions, and more, so always take advice tailored to you.

Director Salary Options for 2026/27

Director salaries normally fall into one of two efficient ranges:

A) Salary up to the personal allowance (£12,570)

This is often used when the only person on the payroll is a director, so the company does not qualify for the Employment Allowance. This level:

Keeps you within the National Insurance credits system (protecting your State Pension record)
Minimises tax and NI

B) Higher salary when the Employment Allowance applies

If your company has more than one director or another employee on payroll, you may be eligible for the Employment Allowance, which reduces employer’s NI by up to £10,500. In these cases, taking a higher salary can be more tax‑efficient because:

Employer’s NI is covered by the Employment Allowance
You get more corporation tax relief on the salary

This option isn’t available for single-director companies with no other eligible staff.

In some situations - particularly where there are two directors, Employment Allowance is available, and the business wants to extract higher levels of income - salaries of up to around £40,000 each can be more tax‑efficient.

This depends heavily on your wider income, allowances and business profits, so it should always be checked with your accountant.

Dividends for 2026/27

If you're looking to take any further income from your company after the salaries, you would take dividends, although they can only be paid when you have enough profit in the company.

Dividends are taken from post tax profits which means that you don't get tax relief on them like you do for salaries.

You should also make sure that dividends are declared in accordance with your shareholdings if there are more than one shareholders.

The dividend tax rates in the basic rate band will increase to 10.75% (previously 8.75%) and 35.75% (previously 33.75%) from 6 April 2026.

Other Considerations

Personal allowance

The tax-free personal allowance is £12,570, but you lose £1 of personal allowance for every £2 earned over £100,000.

If your total income (salary + dividends + any other income) exceeds £100,000, your personal allowance tapers away.

This creates an effective tax rate of 60% within the £100,000-£125,140 band, making careful planning essential.

Child Benefit & Tax-Free Childcare Interactions

You may need to pay back some or all of your Child Benefit if your adjusted net income exceeds £60,000. Dividends count towards this, which often catches directors by surprise.

Tax-free childcare eligibility is based on both parents working, earning the minimum threshold (as salary, not dividends) and not earning over £100k (total income).

So again, this is a key reason why personalised planning is essential.

How Much Do you Need (or Want)

Think about how much income you need (or want) your company to provide and speak to your accountant and the best way to optimise this whilst taking into account your personal circumstances and goals.

Don't forgot to use other tax-efficient ways to extract profits from your company such as pension contributions, relevant life insurance, trivial benefits etc. Check out our previous blogs for more information on these.

Final Reminder: Always Take Advice

This article is general guidance only, tax rules are complicated, and the right salary/dividend balance varies person‑to‑person.

If you're unsure what’s best for your situation, speak to your accountant, or if you’d like help from CJL Accountancy, we’d be happy to walk you through the best setup for the 2026/27 tax year. Contact us here .

Can AI Replace an Accountant? Why You Still Need a Human Expert

Mon, 09 Mar 2026 08:00:00 GMT

Discover why AI alone isn’t enough for your accounts and tax, and how a professional accountant adds real value to your business.

With the rise of artificial intelligence (AI), many business owners are tempted to use automated tools for bookkeeping, accounts, tax returns, and financial management. AI can seem like a quick, cheap solution, but is it really enough?

The answer: not for the complex, personalised work your business needs.

What AI Can Do

AI tools are great at handling repetitive tasks, such as:

Categorising transactions and receipts automatically
Generating reports and summaries of your accounts
Highlighting potential errors or anomalies
Suggesting basic tax calculations

For straightforward tasks, AI can save time, but those tasks need setting up correctly and reviewing. There’s also more to accounting than just numbers.

Why You Still Need a Human Accountant

Here’s why relying solely on AI can put your business at risk:

Understanding Your Unique Situation

Every business is different. Accountants don’t just process numbers, they interpret them in the context of your specific goals, industry, and circumstances. AI can’t offer advice tailored to your business strategy.

Navigating Complex Tax Rules

HMRC rules are constantly changing. A human accountant can make sense of allowances, reliefs, and deadlines, helping you pay the right tax while maximising savings. AI tools can make mistakes if your situation doesn’t fit a standard template, and it relies on historic information so can miss updates.

Managing Risks and Compliance

Accountants are trained to spot risks, prevent errors, and handle disputes with HMRC. If you rely only on AI, mistakes can slip through unnoticed, potentially leading to penalties or fines.

Providing Strategic Advice

Accountants do more than just numbers, they help you plan for growth, improve cash flow, and make informed decisions. AI cannot replace this human judgement and experience.

Peace of Mind

Knowing a qualified accountant is managing your accounts means less stress and more confidence. AI can’t give you reassurance or explain your accounts in plain English.

The Smart Approach: AI + Accountant

The most effective solution isn’t choosing AI or an accountant, it’s combining the two. At CJL Accountancy, we use the latest technology to streamline your accounts and reduce manual work, while our team provides the insight, advice, and personal service AI can’t match.

Bottom line: AI can assist, but it cannot replace the expertise, judgement, and human connection of a professional accountant. For peace of mind, accuracy, and better business decisions, hiring an accountant is still the smartest choice.

�� Get in touch today for friendly, professional support with your business.

Planning for the 2025/26 Tax Year End: Make the Most of Your Allowances

Mon, 02 Mar 2026 08:00:01 GMT

A practical guide for UK taxpayers and business owners to use available allowances, reduce tax bills and stay ahead of the 2025/26 year end.

As we head towards 5 April 2026, now is the perfect time to review your finances and ensure you’re making full use of the allowances and reliefs available for the 2025/26 tax year. Smart planning before year end can significantly reduce your tax bill, and for many business owners, it can also improve cash flow and support long‑term financial goals.

Below is a simple, user‑friendly guide to the key areas to review.

1. Maximise Your Allowances

Each tax year, you’re entitled to various tax-free allowances, and if you don’t use them, you lose them. Some key allowances to consider:

Personal Allowance - the first £12,570 of your income is tax-free. Ensure you’re making full use of it, especially if your income fluctuates.
Dividend Allowance - if you receive dividend income, the first £500 is tax-free.
Personal Savings Allowance - up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers of tax-free interest income.
Trading Allowance - up to £1,000 of tax-free gross income per year from self-employment.
Property Allowance - up to £1,000 of tax-free gross income per year from rentals.
Rent-A-Room Relief - if you let a room in your home, up to £7,500 per year can be received tax-free.

2. Make the Most of Pension Contributions

Pension contributions remain one of the most tax‑efficient ways to reduce your tax bill. Benefits include:

Income tax relief
Possible reduction of the high‑income child benefit charge
Potential restoration of the Personal Allowance

For many business owners, employer pension contributions can also be a deductible business expense - a powerful tool for corporation tax planning.

3. Maximise Your ISA Allowances

Every adult has a £20,000 ISA allowance for 2025/26. Using it means:

Tax‑free interest
Tax‑free dividends
Tax‑free capital gains

If you haven’t used your allowance yet, topping up before 5 April ensures you don’t lose it, ISA allowances cannot be carried forward.

4. Capital Gains Tax Allowance

The annual exempt amount for Capital Gains Tax is still £3,000. If you’re considering selling investments outside of an ISA, property or other assets, check whether making disposals before 5 April would:

Use your annual CGT allowance
Take advantage of lower income levels in this tax year
Allow you to rebalance investment portfolios more tax‑efficiently

Spreading disposals over two tax years (e.g., March and April) can also be beneficial.

5. Married Couples & Civil Partners: Don’t Forget Transfers

Check the following:

Marriage Allowance (if one person's income is below £12,570 and the other is a basic rate taxpayer)
Transferring assets to make use of both partners’ CGT allowances and basic rates
Holding assets in the name of the lower‑rate taxpayer to reduce tax on interest or dividends

Simple planning can often lead to meaningful savings.

6. Company Directors: Review Salaries and Dividends

If you run your own limited company, review your remuneration strategy before 5 April. Consider:

Have you taken the optimal mix of salary and dividends for tax efficiency?
Should dividends be brought forward before the dividend tax rate increase?

Getting this right can save hundreds or even thousands in tax.

7. Self‑Employed? Review Expenses Before Year End

If you’re self-employed or in a partnership, check whether:

Any business expenses can be brought forward
You need to invest in equipment that qualifies for capital allowances
You’ve set aside enough for the July payment on account
You’re affected by Making Tax Digital for Income Tax from April 2026 - see our blog on this here

A year‑end review can help stabilise cash flow and avoid surprises.

8. Consider Gift Aid Donations

Charitable giving doesn’t just support good causes, it can also help with tax planning. Gift Aid donations:

Extend your basic rate band
Reduce higher‑rate tax
Potentially help reclaim your Personal Allowance

If you’re charitable anyway, getting the timing right can save tax.

Final Checks Before 5 April

A quick run‑through of the essentials:

Have you maximised allowances that can’t be carried forward?
Are your pensions and ISAs topped up?
Directors - are your salary and dividends optimised for tax?
Self-employed - are your records up to date (invoices, receipts, payroll)?

Need help reviewing your tax position?

Tax year end is the ideal time for a quick financial health check. If you’d like tailored advice for your business or personal tax affairs, CJL Accountancy is always happy to help you make the most of your allowances and keep things simple.

�� Get in touch today to book a free consultation.

Budgeting for Growth: How to Plan Your Business Finances Effectively

Mon, 23 Feb 2026 08:00:00 GMT

A practical guide for UK business owners on building a financial plan that supports sustainable, profitable growth.

Growing a business is exciting, but without a solid financial plan, growth can quickly turn into strain. A clear, realistic budget helps you stay in control of cash flow, make confident decisions, and ensure your business can scale sustainably.

Below is an easy‑to‑follow guide created for UK small business owners looking to budget smarter.

Why Budgeting Matters for Business Growth

Budgeting isn’t about restricting your business, it’s about enabling growth. A good budget allows you to:

Allocate resources strategically
Identify affordability before committing to new costs
Spot cash flow gaps early
Plan for investment and expansion
Make informed decisions backed by data

In short: budgeting gives you control, not constraints.

1. Start With Your Current Financial Position

Before planning ahead, understand where your business stands today. Review:

Profit and loss trends - look at (at least) 12 months of revenue, gross profit, overheads and net profit.
Cash flow patterns - seasonal sales, slow-paying customers, or VAT deadlines can all affect available cash.
Key cost drivers - staff costs, materials, and marketing expenses are common areas of change as you grow.

This foundation helps you create realistic future projections, not optimistic guesses.

2. Forecast Your Revenue Accurately

Growth begins with understanding where increased income will come from.

Break revenue forecasts down into:

Products or services
Customer types
Sales channels
Price changes

Then consider factors like:

Market trends
Capacity to deliver
Planned investments (e.g., new staff or equipment)
Economic conditions
Lead times for new sales

Tip: Use three scenarios - best case, expected case, and cautious case. This ensures you’re prepared for ups and downs.

3. Plan Your Costs - Both Fixed and Variable

As businesses grow, costs can rise quickly and unexpectedly. Budgeting for them avoids cash flow surprises.

Fixed costs include:

Rent
Insurance
Software subscriptions
Loan repayments

Variable costs include:

Materials
Freelancers/contractors
Sales commissions
Packaging/delivery costs

Growth‑related costs to plan for:

Hiring staff
Increasing stock
Upgrading equipment or software
Additional marketing spend
Professional fees

Forecast these carefully so you know exactly what you can afford.

4. Don’t Forget Tax Obligations

Many businesses forget to budget for taxes, then panic when the bill arrives.

Key ones to factor in:

Corporation Tax (19–25% depending on profits)
VAT (if registered) - also keep an eye on revenue and the VAT threshold if you're not registered yet
PAYE and NICs for staff - including any additional hires

Setting money aside monthly avoids unwanted surprises.

5. Monitor and Adjust Your Budget Monthly

Your budget shouldn’t sit in a drawer. Review it monthly so you can:

Compare budget vs. actuals
Identify overspending early
Adjust spend based on revenue
Respond to market changes
Reallocate resources to what’s working

Consistent reviews make your budget a living, breathing growth tool, not a static document.

6. Plan for Cash Flow, Not Just Profit

A profitable business can still run out of cash.

Growth often causes cash pressure due to:

Higher stock levels
Bigger payroll
Longer customer payment terms
Upfront investment in marketing or equipment

Use a rolling 12‑month cash flow forecast to track:

When money is due in
When payments go out
Peaks and troughs in available funds

Cash flow visibility is key for confident growth.

7. Build a Growth Fund or “Opportunity Pot”

Set aside a percentage of profits each month into a dedicated pot for:

Expansion
New product development
Extra staff
Technology upgrades
Marketing pushes

This avoids borrowing every time you want to take the business to the next level.

8. Use Technology to Stay in Control

Modern accounting software makes budgeting much easier.

Tools like Xero, Sage, Quickbooks allow you to:

Generate forecasts
Track actuals vs budget
Monitor cash flow
Spot trends instantly

9. Get Professional Support When Planning for Growth

As your business expands, financial decisions become more complex. Working with a Chartered Accountant can help you:

Set realistic budgets
Forecast cash flow
Identify tax‑efficient strategies
Understand the numbers clearly
Make confident, informed decisions

Growth is simpler when you have expert guidance.

Final Thoughts

A well-planned budget is one of the most valuable tools for business growth. It helps you stay in control, plan ahead, and make smart financial decisions with confidence.

With the right structure, forecasting, and regular reviews, your budget becomes more than numbers, it becomes your roadmap to sustainable, profitable growth.

Need Help Managing Your Growth?

CJL Accountancy can help you set up better systems, understand your numbers, and make informed financial decisions.

�� Get in touch today to book a free consultation.

Cash Flow Management: Strategies to Keep Your Business Afloat

Mon, 16 Feb 2026 08:00:00 GMT

Practical tips to help small businesses improve cash flow, stay profitable, and avoid financial stress.

Why Cash Flow Matters More Than Profit

Many small businesses focus on profit, but it’s cash flow that keeps your business alive day to day. Even profitable businesses can run into trouble if they don’t have enough cash to cover expenses like rent, payroll or supplier invoices.

Cash flow management is about understanding where your money is coming from, where it’s going, and when. Managing it well helps you plan ahead, reduce surprises, and make confident business decisions.

1. Forecast Your Cash Flow

A cash flow forecast is one of the most powerful tools for business owners. It gives you visibility over your expected income and outgoings for the next few months so you can see potential shortfalls early.

You don’t need anything complicated: a simple spreadsheet or software like Xero can help you track and project your cash position.

Tip: Review your forecast monthly (or weekly during busy periods) and update it as new information comes in.

2. Get Paid Faster

Late payments are one of the biggest threats to healthy cash flow.

Invoice quickly - don’t wait until month-end.
Use online payments - make it easy for clients to pay instantly.
Set clear payment terms - include due dates and late payment penalties.
Send friendly reminders - automated email nudges work wonders.

If you’re a limited company, linking your accounting software to your invoicing system (for example, Xero + Stripe or GoCardless) can speed things up dramatically.

3. Control Your Outgoings

Keeping track of expenses can be tricky when you’re busy, but it’s essential for good cash flow management.

Review subscriptions and software costs regularly - cancel what you don’t use.
Negotiate better payment terms with suppliers.
Delay large purchases until you know your cash position is strong.
Separate business and personal spending to keep things clear for tax and accounting.

4. Build a Cash Buffer

Unexpected costs happen - a client pays late, a big bill lands, or business slows down. Having a cash reserve can keep your business steady during lean months.

Aim to save at least one to three months’ worth of expenses. Set up a separate savings account and transfer a small percentage of every invoice you receive.

5. Use Cloud Accounting Tools

Digital tools like Xero, QuickBooks, and FreeAgent make cash flow management easier than ever. They connect directly to your bank, automate reconciliations, and show your real-time cash position at a glance.

6. Keep on Top of Taxes

VAT, PAYE, and Corporation Tax can take a big bite out of your cash flow if you don’t plan for them.

Set money aside regularly for tax, ideally in a separate account. Your accountant can help estimate what you’ll owe each quarter so you’re never caught off guard.

7. Get Professional Advice Early

If your cash flow is tight, don’t wait until it becomes a crisis. A good accountant can help you:

Review your financial position
Create realistic forecasts
Identify areas for improvement
Plan ahead for tax and growth

At CJL Accountancy, we work closely with business owners to strengthen their finances, simplify bookkeeping, and keep cash flowing smoothly.

Final Thoughts

Cash flow management isn’t just about survival, it’s about creating stability and freedom in your business. With clear visibility, smart tools, and the right support, you can take control of your finances and plan for long-term success.

Need Help Managing Your Cash Flow?

CJL Accountancy can help you set up better systems, understand your numbers, and make informed financial decisions.

�� Get in touch today to book a free consultation.

Do You Still Need a Bookkeeper in 2026?

Mon, 09 Feb 2026 08:00:00 GMT

Spend less time on numbers and more time growing your business with a bookkeeping expert by your side.

In 2026, technology has transformed the way businesses handle their finances. With smart accounting software, automated bank feeds, and AI-driven reporting, you might be wondering: Do I even need a bookkeeper anymore? We may be biased but we think the answer is yes.

Focus on Growing Your Business

Every business owner knows that time is money. The hours spent reconciling accounts, chasing receipts, or categorising expenses could be better invested in strategies that grow your business. A professional bookkeeper frees up your time so you can focus on sales, marketing, product development, and client relationships, the areas that directly impact your revenue.

Expertise That Makes a Difference

Even with the most advanced accounting software, human expertise is irreplaceable. It often just looks for outstanding costs for the same amount, not taking into account who the payment is to.

A skilled bookkeeper understands not just how to record transactions, but why they matter for your business. They ensure your accounts are accurate, your tax obligations are met, and your financial reports give you meaningful insights. This expertise helps you make informed decisions, spot opportunities, and avoid costly mistakes.

Stay Compliant with Confidence

Financial compliance is more complex than ever. From VAT obligations to Self Assessment, missing deadlines or misreporting can lead to penalties and stress. A bookkeeper keeps you on track, helping you stay compliant without having to become a finance expert yourself.

Boost Your Business Intelligence

Bookkeepers and accountants do more than just balance the books. They provide insights into cash flow trends, profitability, and cost-saving opportunities. With accurate, up-to-date financial data, you can make confident strategic decisions, plan for growth, and spot potential challenges before they become problems.

Conclusion

In 2026, the role of a bookkeeper isn’t just about data entry. It’s about giving business owners the freedom to grow while having an expert handle the complexities of finance. If you want more time, more confidence, and better insights into your business finances, a professional bookkeeper remains an invaluable investment.

At CJL Accountancy, we can help with all of your finance needs from year end accounts and tax returns, to a full virtual finance office including bookkeeping, paying suppliers, chasing customers, payroll and VAT.

�� Get in touch today for friendly, professional support with your finances.

Making Tax Digital: Your Next Steps Before April 2026

Mon, 02 Feb 2026 08:00:00 GMT

How to prepare now for the next phase of MTD for Income Tax

From April 2026, thousands of sole traders and landlords will join the next stage of Making Tax Digital (MTD) and it's not something that can be ignored.

What is Making Tax Digital?

Making Tax Digital (MTD) is an HMRC initiative designed to make the UK tax system more efficient, accurate and easier for taxpayers to manage. It replaces traditional paper-based records and manual submissions with a digital-first approach.

MTD affects how businesses and individuals keep their financial records and how they submit tax information to HMRC. You will need to keep your transactions digitally and send quarterly updates to HMRC.

Who Does MTD Apply To?

From April 2026, self-employed individuals and landlords with annual income over £50,000 in their 2024/25 tax return will be in MTD. This is gross income before deducting any expenses, and if you have multiple self-employments or let properties, or both, then it's everything added together. You can ignore other income like employment or pensions.

What Are The Deadlines?

The quarterly submissions will depend on whether you do your accounts to 31 March or 5 April, but the deadline is the same for both.

It will either be:

6 April 2026 to 5 July 2026 – due by 7 August 2026

6 July 2026 to 5 October 2026 – due by 7 November 2026

6 October 2026 to 5 January 2027 – due by 7 February 2027

6 January 2027 to 5 April 2027 – due by 7 May 2027

Or:

1 April 2026 to 30 June 2026 – due by 7 August 2026

1 July 2026 to 30 September 2026 – due by 7 November 2026

1 October 2026 to 31 December 2026 – due by 7 February 2027

1 January 2027 to 31 March 2027 – due by 7 May 2027

Here’s how to start preparing in a way that saves time, reduces stress, and keeps you compliant.

1️⃣ Open a dedicated business bank account

If you haven’t already, now is the time to separate your business and personal finances. MTD will be much easier if your records are clear, accurate, and easy to connect with your accounting software. Having a dedicated business bank account means:

You can automatically import transactions into your accounting software
Your income and expenses are easier to track and categorise
You’ll reduce errors, and the temptation to mix personal and business spending

Many modern business accounts are free and MTD-friendly.

2️⃣ Choose your MTD-compatible software

To comply with MTD, you’ll need to record income and expenses digitally, and send quarterly updates to HMRC. You can use a spreadsheet but you'll need dedicated bridging software to do the quarterly updates so we would recommend using bookkeeping software as there are other benefits, and there are some free options.

✅ Sage Individual Free is an option for self-employed users and landlords with simple accounts.

✅ Mettle (by NatWest) is a free bank account and, as long as you make one transaction per month, gives you free access to bookkeeping softaware FreeAgent.

There are other low cost options available, speak to your accountant if you're not sure. Whichever you choose, make sure it can:

Record transactions digitally
Categorise income and expenses
Submit quarterly updates automatically
Prepare the annual “End of Period Statement” (EOPS) and final declaration

Bookkeeping software can give you a clearer picture on your profits and what your tax liability is going to be, so you can be more prepared.

3️⃣ Get into the habit now

Even though you don’t need to file under MTD until July 2026, it’s smart to start working digitally now.

You’ll get used to:

Keeping records digitally
Reviewing your profit and loss regularly
Planning for tax instead of being surprised at year-end

4️⃣ Plan ahead for the April 2027 expansion

From April 2027, MTD will extend to those earning over £30,000 from self-employment and/or property. So, even if you’re not caught in 2026, it’s still worth getting your systems ready now. The same software, habits, and bank setup will apply, so anything you do today puts you ahead of the curve.

How CJL Accountancy can help

At CJL Accountancy, we’re already helping clients transition to digital record-keeping smoothly. Whether you need advice on which software to choose, or want a walkthrough of quarterly reporting, we can guide you every step of the way. We can even do your digital bookkeeping and submissions for you.

�� Get in touch today to start your digital tax journey with expert support every step of the way.

Time to Pay Arrangements with HMRC: What They Are and How to Apply

Mon, 26 Jan 2026 08:00:00 GMT

If you’re struggling to pay your tax bill, HMRC’s Time to Pay arrangement could give you the breathing space you need - here’s how it works and how to apply.

What is a Time to Pay Arrangement?

A Time to Pay arrangement is a payment plan agreed with HMRC that allows you to spread the cost of your tax bill over a longer period if you can't afford to make the payment on time.

Rather than facing penalties or enforcement action, you can work with HMRC to pay your tax in manageable monthly instalments.

Who Can Apply?

You can request a Time to Pay arrangement if you:

Owe tax to HMRC and cannot pay it in full on time
Are willing to pay what you owe in instalments
Communicate proactively with HMRC before or shortly after the payment deadline

How to Apply for a Time to Pay Arrangement

1. Check if you’re eligible online

If your Self Assessment tax bill is under £30,000 and you:

Have no other payment plans or debts with HMRC
Are within 60 days of the payment deadline
Have filed all returns up to date

You can usually set up a Time to Pay plan online through your HMRC account - no need to call.

2. Contact HMRC directly

For larger debts, or if you don’t meet the online criteria, you’ll need to call HMRC’s Payment Support Service. They’ll ask for details such as:

The amount you owe
Why you’re struggling to pay
What payments you can afford each month

3. Agree a payment plan

If HMRC agrees, you’ll receive confirmation of your monthly payment amount and duration of the plan. Payments are typically made via Direct Debit.

What HMRC Will Consider

When reviewing your request, HMRC will look at:

Your financial position and cashflow forecast
Whether you’ve kept up with past tax obligations
Your ability to make regular payments

They’ll want reassurance that the debt can be cleared within a reasonable timeframe.

What Happens If You Miss a Payment?

If you miss a payment or don’t keep up to date with new tax obligations, HMRC can cancel the arrangement and demand the full amount immediately.

It’s crucial to contact HMRC straight away if your circumstances change - they may be able to adjust your plan.

Benefits of a Time to Pay Arrangement

✅ Avoids penalties and enforcement action

✅ Protects your credit and reputation

✅ Helps manage cashflow during tough periods

✅ Keeps your business trading while catching up on tax

Need help simplifying your taxes?

At CJL Accountancy, we can help you understand your tax, make sure your Self Assessment is accurate and up to date, and advise on how best to approach HMRC if you’re struggling to pay.

�� Get in touch today for friendly, professional support with your Self Assessment.

Car Expenses for the Self-Employed: Actual Costs vs Simplified Expenses

Mon, 19 Jan 2026 09:00:00 GMT

Understanding How to Claim Vehicle Costs on Your Tax Return

If you’re self-employed and use a car for business purposes, knowing how to claim your vehicle costs correctly can save you both time and money. HMRC offers two methods for claiming car expenses: actual costs and simplified expenses. Choosing the right method depends on your circumstances and record-keeping preferences.

What is Business Mileage?

Business mileage refers to your journeys for work-related activities that are not your normal commute. This includes:

Visiting clients or suppliers
Traveling between work sites
Collecting or delivering goods
Attending business meetings or events

Commuting from home to your usual workplace does not count as business mileage.

Keeping an accurate mileage log is essential for claiming either actual costs or simplified expenses.

Actual Costs: Claim What You Really Spend

Claiming actual costs means calculating your business-related vehicle expenses based on your receipts and records. Eligible costs include:

Fuel
Insurance
Road tax
MOTs
Repairs and servicing
Vehicle cost (subject to capital allowance rules)

How it works: You need to calculate the percentage of business use. For example, if your car is used 60% for business, you can claim 60% of your total car expenses. You should keep a mileage log to calculate the business %.

Pros:

Potentially higher deductions if your car is expensive to run
Can claim precise costs for tax efficiency

Cons:

Requires detailed record-keeping of all expenses
More time-consuming

Simplified Expenses: Flat Rates Made Easy

HMRC’s simplified expenses allow you to claim a flat rate per mile, without tracking actual vehicle costs. The rates for 2025/26 are:

45p per mile for the first 10,000 business miles
25p per mile for additional business miles

How it works: If you drive 8,000 business miles in the year, you simply multiply 8,000 by 45p, giving a claim of £3,600.

Pros:

Easy to calculate and track
No receipts or detailed records required (just a mileage log)

Cons:

May be less beneficial if your actual vehicle expenses are high

Which Method Should You Choose?

Use actual costs if your vehicle is expensive to run and business use is significant.
Use simplified expenses if you want a straightforward, low-maintenance approach.

Many self-employed people track both methods during the year to compare and choose whichever gives a bigger tax deduction. Note that once you've made a choice, you need to carry on with that choice for the whole time you use that vehicle.

Need help simplifying your taxes?

If you’re self-employed and not sure what you can claim, we can make it clear.

Get in touch with CJL Accountancy today, we’ll help you make sense of your numbers so you can focus on your business.

HMRC Simplified Expenses: A Self-Employed Guide to Flat-Rate Allowances

Mon, 12 Jan 2026 08:00:02 GMT

Save time, stay compliant, and make your record-keeping easier.

If you’re self-employed, you already have enough to think about without getting lost in piles of receipts and complex calculations. That’s where HMRC’s Simplified Expenses come in; a set of flat-rate allowances designed to make claiming certain business costs quicker and easier.

But what exactly are simplified expenses, and are they the right choice for you? Let’s break it down.

What are Simplified Expenses?

Simplified expenses are flat rates set by HMRC that you can use instead of working out the exact cost of some common business expenses.

They’re for sole traders and partnerships, not limited companies.

You can use them for things like:

Business use of your home
Business mileage
Living at your business premises (for example, if you run a guest house or bed and breakfast)

Using the flat rates means you don’t need to record every exact bill or split personal and business costs manually; HMRC’s set figures do the work for you.

Business Use of Your Home

If you work from home, HMRC lets you claim a monthly flat rate based on the number of hours you work there each month:

25-50 hours worked - £10 claim
51-100 hours worked - £18 claim
101+ hours worked - £26 claim

You can claim different amounts for each month if you work different hours each month, and it can include diary planning and doing your bookkeeping.

This is instead of working out the exact costs and what proportion to claim.

You can also still claim separate costs for things like phone and internet if used for business.

Business Mileage (Cars, Vans, Motorcycles)

Instead of tracking every cost for fuel, insurance, and servicing, you can use HMRC’s approved mileage rates:

Cars and vans - 45p per mile for the first 10,000 miles, then 25p after

Motorcycles - 24p per mile

You just need to record your business miles, no receipts required for petrol or repairs.

This is instead of working out the exact costs and claiming the business proportion.

Note that once you've made a decision to claim mileage or actual costs, you must continue for that vehicle.

Living at Your Business Premises

If you live where you work - for example, you run a small B&B - you can use simplified expenses to adjust for personal use.

You’ll calculate your actual business costs (such as utilities, council tax, etc.) and then subtract a fixed amount for your personal use, depending on how many people live there:

1 person - £350 per month

2 people - £500 per month

3 or more people - £650 per month

Should You Use Simplified Expenses?

Simplified expenses can make your bookkeeping much easier, but they’re not always the most tax-efficient option.

✅ They’re great if you want to:

Save time on record-keeping
Keep your accounts simple
Have low or average running costs

⚠️ But they might not be right if:

You have high actual expenses
You want to claim the exact cost of bills or travel
You need precise figures for business analysis or funding applications

We recommend trying both methods for a short period; track your actual costs for a month or two, then compare them to the flat rates. You’ll quickly see which gives you the better result.

If you’re unsure, we can review your figures and help you choose the most efficient option for your next tax return.

Need help simplifying your taxes?

If you’re self-employed and not sure what you can claim, we can make it clear.

Get in touch with CJL Accountancy today , we’ll help you make sense of your numbers so you can focus on your business.

What Happens If You Miss the Tax Return Deadline?

Mon, 05 Jan 2026 08:00:01 GMT

Understand HMRC’s penalty and interest rules, and why it pays to file your return on time.

If you’re one of the millions of people who need to complete a Self Assessment tax return, the key date to remember is 31 January 2026 (for the 2024/25 tax year). That’s the deadline to file your return and pay any tax due to HMRC.

At CJL Accountancy, we always encourage clients to submit their returns early where possible, but if you haven’t done it yet, there’s still time. Here’s what happens if you miss the deadline, and why acting quickly can save you money and stress.

What happens if you miss the Self Assessment deadline?

If your tax return isn’t submitted by midnight on 31 January , HMRC will automatically issue a £100 late filing penalty , even if you don’t owe any tax.

After that, further penalties apply:

3 months late: £10 per day, up to a maximum of £900
6 months late: An additional £300 (or 5% of the tax due, if higher)
12 months late: Another £300 (or 5% of the tax due, if higher)

These penalties can add up quickly, especially if you miss multiple deadlines.

Late payment penalties

HMRC also charge penalties for paying your tax late , whether your tax return is filed or not. These are:

5% of the tax unpaid after 30 days
Another 5% after 6 months
A final 5% after 12 months

It's worth noting that you can make a tax payment even if you haven't filed your tax return , which can help reduce penalties.

Interest charges on late tax payments

HMRC will start charging interest from 1 February on any outstanding tax. The interest rate will be 7.75% from 9 January 2026 (it's 4% above the Bank of England base rate).

Can you appeal?

If you have a reasonable excuse - for example, serious illness or technical issues with HMRC’s system - you can appeal a late filing or late payment penalty. However, HMRC is strict about what counts as reasonable, so it’s best not to rely on this. If you’re appealing on technical issues, keep screenshots or videos of the errors you encounter.

Interest charges, however, are very difficult to appeal because they’re designed to compensate HMRC for the late payment and reflect the benefit you had from holding onto the funds.

Time-to-pay

You can set up a time-to-pay arrangement with HMRC if you can't make the full tax payment on time. You can either do this in your online self-assessment account or by contacting HMRC. Penalties are suspended if you have a time-to-pay agreement, as long as you stick to the agreed terms.

What should I do if I haven't filed my return yet?

You still have some time; try to prepare and file your tax return and pay your tax by 31 January. If that's not possible:

File a provisional return by 31 January: If you're waiting for information to finalise your tax return then file with the information you do have and perhaps an estimate of what you're waiting for. You have 12 months to file your final return.
Make a payment on account: If you're not sure what your final tax figure is, make an estimated payment on account to reduce interest and penalties.

How to avoid penalties and reduce stress

File early: In the future, even if you wait to pay until January, filing early gives you time to plan your tax bill.
Check your details: Make sure HMRC has your up-to-date address so you don’t miss important letters.
Use professional support: An accountant can help you submit accurately and claim all allowable expenses.
Plan for payment: Set aside funds throughout the year to avoid a cash flow shock in January.

If you’re not sure where to start, CJL Accountancy can help you complete your return quickly and accurately so you can avoid penalties.

Please note: We cannot guarantee meeting the 31 January filing deadline for clients signing up in January. However, we may be able to reduce interest and penalties by preparing your return soon after.

For the 2025/26 tax year, we’ll work with you to get things completed early.

Get in touch with CJL Accountancy today .

Accountancy Terms Explained: Simple Definitions for Small Business Owners

Mon, 15 Dec 2025 09:30:01 GMT

Making sense of the jargon so you can focus on running your business.

Running a business means wearing many hats and understanding your finances is one of the most important ones. But accounting terms can sometimes sound like a different language. To help, we’ve put together a simple guide to common accountancy terms you’ll see on reports, invoices, or from your accountant, explained in plain English.

Assets

Things your business owns that have value - for example, cash, stock, vehicles, or equipment. Assets are what help your business operate and generate income.

Liabilities

The opposite of assets - these are what your business owes to others. That includes loans, unpaid bills, or taxes due.

Equity

Equity is what’s left when you subtract your liabilities from your assets. It represents the owner’s share of the business, often referred to as “net assets.”

Directors, Shareholders and Sole Traders

In the UK, there are different ways to run a business, and each comes with its own responsibilities.

A sole trader runs the business as an individual (referred to as being self-employed) - you keep all the profits after tax but are personally responsible for any debts.
A shareholder owns part (or all) of a limited company. Profits can be paid to shareholders as dividends.
A director manages the day-to-day running of a limited company. Many small business owners are both directors and shareholders, meaning they can take a salary and dividends as income.

Understanding which structure applies to you helps ensure your accounts and taxes are handled correctly.

Turnover (or Revenue)

Your total sales or income before any expenses are taken off. It’s a key measure of how much your business is bringing in.

Profit

What’s left after all costs have been deducted from your turnover.

Gross profit is your sales minus the direct costs of making or buying your products.
Net profit is what’s left after all expenses, including overheads and tax.

Expenses

The costs of running your business, such as rent, insurance, travel, or subscriptions. Keeping track of expenses is essential for accurate accounts and tax returns.

Cash Flow

Cash flow shows how money moves in and out of your business. A positive cash flow means more money is coming in than going out which keeps things running smoothly.

Accounts Payable

Money your business owes to suppliers, often referred to as creditors.

Accounts Receivable

Money owed to your business by customers, sometimes called debtors.

Balance Sheet

A snapshot of your business’s financial position at a specific point in time (usually your accounting year end). It shows assets, liabilities, and equity all in one place.

Profit and Loss Account (P&L)

A report showing your business income and expenses over a period (usually your accounting year). It tells you if you made a profit or a loss.

VAT (Value Added Tax)

A tax added to most goods and services. If your business is VAT-registered, you’ll need to charge VAT on sales and submit returns to HMRC. You'll need to register for VAT if your taxable turnover exceeds the threshold, there's more information on this here .

Corporation Tax

If you run a limited company, you’ll pay Corporation Tax on your company’s profits each year.

Dividends

Dividends are payments made by a limited company to its shareholders from profits after Corporation Tax. They’re a common way for director/shareholders to take income, alongside a salary. Dividends must be supported by enough profit in the company, and each payment should be documented with a dividend voucher and board minute.

Self-Assessment

If you’re self-employed or receive other untaxed income, you’ll need to file a Self Assessment tax return to HMRC to calculate and pay your Income Tax and National Insurance.

Need help making sense of your accounts?

At CJL Accountancy, we believe finance doesn’t have to be complicated. We explain things clearly, help you understand your numbers, and make sure you’re compliant with HMRC - without the jargon.

�� Get in touch to find out how we can make your accounts simple and stress-free.

Understanding the Difference Between Tax Evasion, Avoidance and Planning

Mon, 08 Dec 2025 09:30:00 GMT

Why good tax planning matters now more than ever after the Autumn Budget

Tax can be complicated - and with so many recent changes announced in the Autumn Budget, it’s never been more important to understand how to manage your tax affairs the right way.

At CJL Accountancy, we often hear business owners and individuals use the terms tax evasion, tax avoidance and tax planning interchangeably. But there are some big and crucial differences between them.

Let’s break down what each one really means.

Tax Evasion - Illegal and Punishable

Tax evasion is when someone deliberately hides income or falsifies information to reduce their tax bill.

Examples include:

Not declaring all business income
Paying workers cash “off the books”
Claiming personal expenses as business costs

Tax evasion is illegal and can lead to severe consequences such as fines, penalties, and even prosecution. HMRC has sophisticated systems in place to detect irregularities, so it’s never worth the risk.

Tax Avoidance - Legal but Risky

Tax avoidance involves using loopholes or complex arrangements to reduce tax bills in ways that may not align with the spirit of the law.

It’s technically legal, but HMRC regularly challenges aggressive avoidance schemes.

For example:

Setting up artificial company structures solely to pay less tax
Using offshore schemes or trusts with no real business purpose

These strategies can backfire, resulting in large, backdated tax bills, penalties, and reputational damage.

Tax Planning - Legal, Sensible and Essential

Tax planning, on the other hand, is both legal and encouraged. It’s about making smart financial decisions to manage your tax efficiently, within the rules.

This might include:

Making use of allowances and reliefs (e.g. ISA limits, pension contributions, capital allowances)
Structuring your business in the most tax-efficient way
Timing income or expenses to maximise reliefs

With changes announced in the Autumn Budget, effective tax planning has become even more important. Whether that’s adjusting salary and dividend mixes, reviewing capital allowance claims, or preparing for new thresholds, planning ahead can help you stay compliant while minimising unnecessary tax.

Why Work With a Qualified Accountant

A qualified accountant can help you:

✅ Stay compliant with HMRC rules

✅ Identify opportunities for legitimate savings

✅ Plan ahead for future tax changes

At CJL Accountancy, we help clients make confident, informed decisions - balancing compliance with smart planning.

UK Budget 2025: What It Means for Individuals, Landlords, and Small Businesses

Mon, 01 Dec 2025 09:30:01 GMT

The UK government delivered the 2025 Budget on 26 November, setting out a wide range of tax and policy changes that will affect individuals, landlords, investors, and limited companies over the coming years.

At CJL Accountancy, we’ve summarised the key announcements that could impact your personal or business finances - and what you can do to prepare.

1. Income Tax Thresholds Frozen Until 2031

The personal allowance (£12,570), basic rate threshold (£37,700), and higher rate threshold (£87,440) were already frozen until March 2028 - and this freeze has now been extended to March 2031.

This is effectively a stealth tax: as wages rise, more income falls into higher tax brackets.

Important note: Tax is only charged at the higher rate on the portion of income that falls above each threshold, not on your total income. So, if your earnings move into the higher rate band, only the amount above £50,270 is taxed at 40%, not everything you earn.

2. £2,000 Cap on Salary Sacrifice from 2029

From April 2029, the tax-efficient salary sacrifice scheme for pension contributions will be capped at £2,000 per year. There’s no indication that employer pension contributions from your own limited company will be affected - these can continue as usual.

3. Rental Property Tax Increased by 2%

From April 2027, tax on rental profits will rise by two percentage points:

Basic rate: 22%
Higher rate: 42%
Additional rate: 47%

It’s important to claim all allowable expenses to reduce taxable profits - for example, agent fees, insurance, repairs, and mortgage interest.

Tip: If you’re considering selling an investment property, speak to us first to plan for any potential Capital Gains Tax (CGT) implications.

4. Savings Income Tax Increased by 2%

From April 2027, tax on savings income (such as bank interest) will also increase by two percentage points:

Basic rate: 22%
Higher rate: 42%
Additional rate: 47%

The personal savings allowance remains unchanged:

£1,000 for basic rate taxpayers
£500 for higher rate taxpayers
No allowance for additional rate taxpayers

Tip: Consider moving savings into ISAs, where interest and growth are tax-free.

5. Cash ISA Limit Reduced for Under-65s

The ISA allowance remains at £20,000 per year, frozen until March 2031. However, from April 2027, those aged under 65 will be limited to £12,000 in Cash ISAs, with the remainder needing to be invested in Stocks & Shares ISAs.

Note: Investments can go down as well as up, and past performance is not a guarantee of future results. We don’t provide investment advice, but we can connect you with a trusted financial advisor.

6. Dividend Tax Rates Increased by 2%

From April 2026, dividend tax rates will rise by two percentage points:

Basic rate: 10.75%
Higher rate: 35.75%
Additional rate: 39.35% (unchanged)

Tip: Company directors may wish to consider bringing forward dividend payments before April 2026 to benefit from current rates.

7. EIS and VCT Changes

From April 2026, the government will increase investment limits for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) to encourage more funding for startups and small businesses. However, the income tax relief for VCTs will reduce from 30% to 20%.

The rules for businesses applying for EIS are also changing to allow scale-ups to benefit as well as start-ups.

8. Capital Gains Tax for Employee Ownership Trusts (EOTs)

With immediate effect, CGT relief on sales of businesses into Employee Ownership Trusts will reduce.

From 26 November 2025, 50% of the gain on disposal to the trustees of an Employee Ownership Trust will be treated as the disposer’s chargeable gain for CGT purposes. The remaining 50% of the gain will not be chargeable at the time of disposal but will continue to be held over to come into charge on any future disposal of the shares by the trustees of the Employee Ownership Trust.

9. Capital Allowances Changes

From April 2026, writing down allowances for plant and machinery will reduce from 18% to 14%.

Businesses can still claim 100% Annual Investment Allowance (AIA) on qualifying assets in the year of purchase up to the £1m threshold. If you have a large purchase to make, the timing should be planned.

10. Making Tax Digital (MTD)

MTD is still going ahead - but there’s good news. HMRC has confirmed that there will be no late submission penalties for quarterly updates during the 2026/27 tax year.

Tip: If you’re self-employed or a landlord, now’s the time to review your bookkeeping systems to ensure you’re ready for digital reporting.

Other Budget Measures

Mansion Tax: Introduced on properties worth over £2 million from April 2028
Business Rates: New reliefs for small businesses, retail, hospitality and leisure sectors from April 2026
National Minimum Wage: Increased from April 2026
Apprenticeships: Fully funded apprenticeships for SMEs
Warm Homes Plan: Additional funding for energy efficiency and heating schemes
Fuel Duty: Frozen until at least September 2026
Electric Vehicles: A per-mile charge will be introduced for EVs and hybrids
Universal Credit: The two-child limit will be removed from April 2026

Next Steps

If any of these changes may affect you, CJL Accountancy can help you plan ahead.

We can review your personal or business tax position, model the potential impact of upcoming rate changes, and help you make the most of available reliefs and allowances.

�� Get in touch today to arrange a chat - we’ll make sure you’re in the best possible position ahead of the new tax years.

Upcoming Budget: What to Expect on 26 November 2025

Mon, 24 Nov 2025 09:30:00 GMT

Rumours, Reforms and What It Could Mean for You

As the Autumn Budget 2025 approaches on Wednesday 26 November, all eyes are on Chancellor Rachel Reeves and her first major fiscal statement since Labour took office.

The Budget comes against a backdrop of a flatlining economy, high borrowing costs and calls for both fairness and fiscal discipline. The Chancellor has promised a “responsible” approach, but one that could still involve difficult decisions.

The Economic Context

The UK economy continues to face sluggish growth, rising debt interest payments and pressure on public services. The Office for Budget Responsibility (OBR) is expected to publish cautious growth forecasts, leaving limited scope for giveaways.

The Treasury has already warned that while the economy “isn’t broken”, it “isn’t working well enough for working people”. That sets the tone for a Budget focused on long-term productivity and fair taxation.

What’s Already Been Signalled

In her pre-Budget speech last week, Rachel Reeves set expectations by reaffirming her commitment to fiscal responsibility - and notably did not rule out tax increases.

However, Labour’s manifesto promised not to raise the headline rates of Income Tax, VAT or National Insurance for working people. That means any revenue-raising measures are likely to come from less visible adjustments - such as frozen thresholds, relief changes or targeted reforms.

Key Rumours Ahead of 26 November

Here’s what’s being speculated by analysts and the financial press:

Income Tax

The tax thresholds are currently frozen until 2028 - a “stealth tax” increase because more tax is payable when pay rises are received (even if they don’t even keep up with inflation). This could be extended beyond 2028, as it generates around £8bn annually.

Income Tax v National Insurance

There are rumours of a 2% rise on income tax with an equal 2% reduction in national insurance. Whilst this will have a neutral effect for working people, pensioners and landlords do not pay national insurance and would be impacted by the 2% rise.

National Insurance on Rental Income

There are rumours that national insurance could start to be charged on rental profits, meaning that landlords could see a significant cut to their post-tax profits.

Pensions and Salary Sacrifice

The rumoured changes to the 25% tax-free pension withdrawal are no longer on the table, but salary-sacrifice could be changed.

Salary-sacrifice is when employees sacrifice a portion of their salary for pension contributions which save both tax and national insurance for the employees, and also employers national insurance for the employers.

There’s speculation that national insurance relief on salary-sacrifice pension contributions could be capped (for example, only applying to the first £2,000).

ISA Allowances

Reports suggest possible tweaks to the annual ISA limit, particularly the Cash ISA limit, which is said to be aimed at encouraging investing rather than providing tax revenue.

Corporation Tax

The main rate is expected to stay at 25%, but businesses could see a tightening of certain reliefs or investment allowances.

Property and Capital Taxes

Adjustments to Stamp Duty or Capital Gains Tax on property are being discussed as potential revenue-raisers.

“Modern” Taxes

Environmental and digital-focused levies could appear, aligning with Labour’s sustainability agenda.

What It Could Mean for Businesses and Individuals

Income Planning

Frozen or lowered thresholds could mean more tax on the same income. Reviewing dividend strategies, bonuses or salary levels will be worthwhile for owner managed businesses.

Payroll & Pension Structures

If salary-sacrifice changes are introduced, employers and directors using these arrangements should review the impact on take-home pay.

Business Reliefs

Any change to R&D, capital allowances or small-business reliefs could affect year-end planning, particularly for growing companies.

Personal Savings

ISAs and pensions remain essential tax-efficient vehicles, so maximising allowances is sensible.

What Happens Next

The Budget will be delivered on Wednesday 26 November. Our blog the next week will cover the changes; often the devil is in the detail.

As always, the above are rumours, so we wouldn’t advise making any drastic changes before then, particularly as we don’t know whether changes would be immediate or at the start of the next tax year.

It’s important to speak to your accountant about any changes that might affect you once the Budget is delivered. They can help you work through your options.

Key Takeaway

The Autumn Budget 2025 is expected to focus on stability, credibility and gradual fiscal tightening - rather than major rate hikes. But “fiscal drag” through frozen thresholds, and subtle changes to reliefs, could still raise billions in additional revenue.

Tax planning remains crucial for both businesses and individuals.

Limited Company Year-End Accounting: What to Do and When

Mon, 17 Nov 2025 09:33:58 GMT

At CJL Accountancy, we help business owners stay compliant and in control of their finances, so here’s our guide to limited company year-end accounting and the key checks to complete before your year-end date.

What Is a Company Year-End?

Your company year-end marks the end of your accounting period. It's usually 12 months after the date you registered your company with Companies House, but you can change it to align with the calendar year, tax year, or your seasonality, whenever you want.

This date determines:

When your annual accounts are due to Companies House
When your Corporation Tax return (CT600) is due to HMRC
The period covered by your company’s financial statements

What Happens at Year-End?

At the end of your accounting period, you’ll need to prepare your statutory accounts - a formal set of financial statements that summarise your business performance for the year.

These include:

Profit and loss account – showing income, expenses, and profit
Balance sheet – showing your company’s assets, liabilities, and equity
Notes to the accounts – giving context to your figures

These figures are then used to prepare your Corporation Tax return and calculate how much tax your company owes.

Pre-Year-End Accounting Checks

Getting organised before your company year-end can make the whole process smoother and ensure you’re claiming all the reliefs you’re entitled to. Here are some key pre-year-end checks you should consider:

1. Review business income and invoices

Check you've raised all sales invoices for work done
Review your debtors list - chase any outstanding debts from customers and write off any bad debts

2. Record all expenses

Check all business expenses are included
Include any business expenses you've personally paid

3. Mileage and business travel

Don't forget business mileage and travel not yet claimed

4. Employee costs

Check that payroll is up to date
Include any bonuses or benefits paid in the year

5. Director's remuneration

Review your salary and dividend payments - are you optimising your pay strategy?
Speak to your accountant if you're unsure how best to balance this

6. Director's loan account

Do you owe your company money? There are tax implications of this if it's over £10k, or if it's not repaid within 9 months of the year-end
Speak to your accountant about a repayment strategy

7. Stocktake

If you hold stock, complete a stock count as close to year-end as possible

8. Asset and equipment purchases

Have you bought any new equipment or assets that might qualify for capital allowances?
If you need to invest in business equipment (like computers or machinery), doing so before your year-end could reduce your Corporation Tax bill through capital allowances.

9. Pensions and investments

Have you made any pension contributions through the company?

10. Other considerations

Have there been any changes in ownership, share structure or directors?
Any large transactions or one-offs?
Are you considering large purchases or investments?
Are you planning for growth, investment or exit?
Do you have surplus cash?

Speak to your accountant about these points so they can work with you towards your goals.

After Year-End: What Needs Filing

Once your year-end has passed, your accountant will prepare and file the following:

Company accounts

These are for your information as they show the company performance during the year and balances at the end of the year. They are also sent to HMRC with the corporation tax return, and are filed with Companies House (a filleted version if your company is small) within 9 months of the year-end.

Corporation tax return

This calculates the corporation tax due and is sent to HMRC, with a copy of the accounts within 12 months of the year end. The corporation tax payment is due 9 months and 1 day after the year-end (yes, before the tax return needs to be filed).

Common Mistakes to Avoid

Leaving bookkeeping until after year-end (this can delay your accounts and tax return)
Missing allowable expenses that reduce taxable profits
Forgetting to claim reliefs like AIA (Annual Investment Allowance)
Letting your director’s loan account go overdrawn without planning repayment

How an Accountant Can Help

An experienced accountant can do more than just file your accounts - they can help you plan ahead, stay compliant, and make informed financial decisions.

At CJL Accountancy, we work with limited company owners to:

Complete pre-year-end reviews to maximise tax efficiency
Prepare compliant statutory accounts and corporation tax returns
Submit filings on time to Companies House and HMRC
Advise on dividends, expenses, and salary planning

Final Thoughts

Your limited company year-end isn’t just about compliance - it’s an opportunity to take stock of your business, review performance, and plan for the future. With the right preparation and professional support, it can be a straightforward and valuable part of running your business.

Need help with your year-end accounts?

CJL Accountancy can take care of everything from pre-year-end checks to filing your accounts and corporation tax return.

�� Get in touch today to make your next year-end stress-free.

How to Set Up and Run Payroll in the UK

Mon, 10 Nov 2025 09:30:00 GMT

If you’re running a business in the UK, understanding how to set up and run payroll is essential.

Whether you’re a sole trader taking on your first employee or a limited company director paying yourself and your team,

in this guide we’ll walk through everything you need to know about UK payroll, including what it is, how to set it up, and what to do each month to stay compliant with HMRC.

What is Payroll?

Payroll is how you calculate, record, and pay your employees’ wages - including tax, National Insurance (NI), and pension contributions. You also use payroll to report this information to HMRC under the PAYE (Pay As You Earn) system.

Do the Self-Employed Need Payroll?

If you’re self-employed or a sole trader, you don’t need to set up a payroll system for yourself, you simply take profits from the business.

However, you do need to set up payroll if you hire employees or apprentices.

What About For A Limited Company

If you run a limited company, you’ll likely need a PAYE payroll scheme, even if you’re the only person on it. It means you can pay yourself tax efficiently, with a mix of salary and dividends. An accountant can help you determine the optimal director’s salary and dividend mix for your business.

Setting Up Payroll

Step 1: Register as an Employer with HMRC

Before paying anyone, you must register as an employer with HMRC. You’ll receive a PAYE reference and Accounts Office reference, which are needed for all payroll submissions.

Step 2: Choose Payroll Software

You’ll need software that can:

Calculate PAYE and National Insurance,
Generate payslips,
Submit RTI (Real Time Information) reports to HMRC, and
Produce year-end documents like P60s.

Popular payroll software options include HMRC Basic PAYE Tools, Xero, and BrightPay.

Step 3: Add Employees and Set Up Payment Details

Enter details such as each employee’s name, address, date of birth, NI number, and tax code.

For directors, you can choose between annual or monthly NI calculations depending on your pay frequency.

Step 4: Run Payroll and Report to HMRC

Each pay period (usually monthly):

Calculate gross pay.
Deduct tax, NI, and pension contributions.
Generate payslips for each employee.
Submit an FPS (Full Payment Submission) to HMRC on or before the pay date.

Step 5: Pay HMRC

You’ll need to pay HMRC any PAYE and NI due, usually by the 22nd of the following month (or the 19th if paying by post). You can pay quarterly if you have less than £1,500 per month to pay to HMRC.

Don't Forget Pensions

If you have employees, you'll need to assess them for auto-enrolment. If they meet the criteria to auto-enrol or opt in then you'll need to process that through the payroll and you may need to make contributions as an employer.

Common Payroll Mistakes to Avoid

Missing RTI deadlines - HMRC can issue penalties if submissions are late.
Using the wrong tax code - Always update when HMRC send new tax codes.
Forgetting pension auto-enrolment duties - You must assess and enrol eligible employees, even if you only have one.
Not keeping records - Payroll records must be kept for at least three years.

Can an Accountant Run Payroll for You?

Absolutely! Many business owners choose to outsource payroll to save time and ensure compliance.

At CJL Accountancy, we handle payroll for self-employed businesses and limited companies of all sizes, so you can focus on running your business while we keep everything compliant and on time.

Final Thoughts

Setting up and running payroll doesn’t have to be stressful. Once your system is in place, it’s simply a routine process of paying people accurately and reporting on time.

�� Need help setting up payroll?

We’ll register your PAYE scheme, run your monthly payroll, and deal with HMRC, so you don’t have to.

�� Get in touch today to simplify your payroll with CJL Accountancy.

Christmas Parties and Gifts: What’s Tax-Deductible for Your Business?

Mon, 03 Nov 2025 09:25:33 GMT

As the festive season approaches, many business owners start thinking about rewarding their team - or themselves - with Christmas parties and gifts. But what can you actually claim as a business expense? And how do the rules differ if you’re self-employed or running a limited company?
Here’s a simple breakdown so you can celebrate without a tax hangover.

�� Christmas Parties: What You Can Claim

Limited Companies

HMRC allows a staff event to be treated as an allowable expense if it meets all three of these conditions:

It’s an annual event – such as a Christmas party or summer BBQ.
It’s open to all employees – not just directors or selected staff.
It costs £150 or less per head (including VAT) – this includes food, drink, entertainment, transport, and accommodation.

✅ If all three apply, there’s no tax or National Insurance for the company or employees.

❌ If you go over £150, the whole amount (not just the excess) becomes taxable as a benefit in kind.

You can invite guests to your Christmas party, but be careful not to invite clients, suppliers or referrers as it may end up as disallowable entertaining. It’s probably best for the invitees to be your employees and a plus one.

�� Tip: You can have more than one annual event (e.g. summer BBQ and Christmas party) - just make sure the combined total per head stays within £150.

Self-Employed (Sole Traders)

Unfortunately, the £150 staff party exemption doesn’t apply to sole traders or partners if you’re the only person in the business. HMRC doesn’t consider entertaining yourself a business expense.

However, if you employ staff, you can claim the cost of a staff Christmas event on the same £150 per head basis.

�� Christmas Gifts: What You Can and Can’t Give

Client Gifts

You can only deduct the cost of client gifts if all of the following apply:

The total cost is £50 or less per client per year
The gift promotes your business (e.g. branded notebooks, mugs, or calendars)
It’s not food, drink, or tobacco (unless it’s a promotional sample)

If any of those conditions aren’t met, the cost isn’t allowable for tax.

Employee Gifts

If you want to give your team something extra this Christmas, you can make use of the trivial benefits rule. You can give employees (including directors) a non-cash gift if:

It costs £50 or less (including VAT)
It’s not cash or a cash voucher
It’s not a reward for work or performance
It’s not part of their contract

✅ Examples: A Christmas hamper, gift card (non-cash), or bottle of wine.

❌ Not allowed: A £50 bonus paid through payroll, or a reward for hitting sales targets.

For directors of close companies (typically where there are five or fewer shareholders), there’s a £300 annual cap on trivial benefits in total per director.

Don’t Forget VAT

If your business is VAT-registered, you can usually reclaim VAT on the cost of staff parties and gifts, as long as they’re for employees only and not for clients or family members.

VAT on entertaining non-employees (including partners, clients, or spouses) cannot be reclaimed.

Final Thoughts

The Christmas season is a great opportunity to celebrate your team’s hard work, and it doesn’t have to come with an unwelcome tax bill. With a bit of planning, you can stay within HMRC’s exemptions and make the most of your festive budget.

If you’re unsure whether your party or gifts qualify, CJL Accountancy can help you review your plans and make sure you’re claiming everything correctly.

�� Get in touch before the year-end so we can help you make the most of your Christmas spend!

Self-Assessment Tax for Directors: What You Need to Know

Mon, 27 Oct 2025 09:45:00 GMT

Running your own limited company gives you flexibility and control, but it also comes with a few extra responsibilities, especially when it comes to tax.

If you’re a company director, you’ll likely need to complete a Self Assessment tax return each year. But what exactly does that mean, why do you need to do it, and how can you make sure you get it right?

In this guide, we’ll walk you through everything you need to know about Self Assessment for directors - including deadlines, what to include, and how to avoid common mistakes.

Do Company Directors Need to File a Self Assessment Tax Return?

In most cases, yes.

HMRC requires a Self Assessment tax return if you receive income that hasn’t already been taxed at source. As a company director, you’re usually paid in a combination of:

A salary through PAYE, and
Dividends from company profits.

Even if you take a small salary below the tax threshold, your dividends could still make you liable for income tax so HMRC expects a return to be filed.

You must file a tax return if:

You’re a company director and you receive dividends or other income outside of PAYE.
You earn more than £10,000 in dividends during the tax year.
You have untaxed income such as rental income, investments, or freelance work.

When Is the Self Assessment Deadline for Directors?

The deadlines are the same for everyone who files a Self Assessment:

5 October: Register for Self Assessment (if you haven’t filed before).
31 October: Deadline for paper returns (rarely used now).
31 January: Deadline for online filing and for paying any tax owed.

The tax year runs from 6 April to 5 April, so your 2024/25 tax return will be due by 31 January 2026.

Missing the deadline can lead to penalties, even if you don’t owe any tax, so it’s best not to leave it to the last minute.

What Should Directors Include in Their Tax Return?

You’ll need to declare all your income for the year, including:

Salary paid via PAYE
Dividends from your company
Interest from savings or investments
Rental income (if applicable)
Any other untaxed income

You can also claim personal allowable expenses and reliefs, such as:

Charitable donations under Gift Aid
Pension contributions
Certain professional fees or subscriptions

Your company accounts will already cover business income and expenses, but your Self Assessment focuses on your personal income and tax liabilities.

How Much Tax Will I Pay as a Director?

The tax rates and thresholds are the same for everyone. You'll pay:

Income Tax on your salary and dividends, and
National Insurance on your salary (if above the threshold).

Your salary will be taxed via PAYE, but dividends and other income are taxed through your Self Assessment.

What Happens If You Don’t File?

HMRC can issue penalties for late filing, even if you don't owe any tax. There are also late payment penalties and interest charges if you pay your tax late.

How an Accountant Can Help

Completing your Self Assessment can feel daunting, especially if you’re juggling payroll, VAT, and company accounts too.

At CJL Accountancy, we help directors file accurately and on time, ensuring:

✅ All income and dividends are correctly reported

✅ You don’t overpay tax

✅ You meet every deadline stress-free

We also offer proactive tax planning to help you structure your income in the most tax-efficient way for the future.

Common Questions About Self Assessment for Directors

Q: Do all directors need to file a tax return?

A: No. If you only received salary and benefits then that will be taxed through PAYE, but anything else will likely need a tax return.

Q: Can HMRC automatically collect my tax through PAYE?

A: Only for your salary - dividends and other income must go through Self Assessment.

Q: When should I register?

A: By 5 October following the end of the tax year when you became a director or started receiving dividends. But if you've missed that for 2024/25, register as soon as possible.

Q: What if my accountant files on my behalf?

A: You’re still legally responsible for ensuring it’s correct and submitted on time, but a qualified accountant makes the process much smoother.

Need Help Filing Your Director’s Tax Return?

At CJL Accountancy, we specialise in helping limited company directors with Self Assessment, dividends, and year-end planning.

We’ll handle the figures so you can focus on running your business.

�� Get in touch today

The Difference Between Director’s Loan Accounts and Dividends (and Why It Matters)

Mon, 20 Oct 2025 08:30:00 GMT

Understanding how DLAs and dividends work can save you tax and stress.

Running your own limited company gives you flexibility in how you pay yourself, but with that freedom comes responsibility. Two of the most common ways directors take money out of their companies are through a director’s loan account (DLA) and dividends. While both can seem similar on the surface - money leaving the company - there are big differences in how they work, and getting it wrong can cost you dearly.

In this blog, we’ll break down what DLAs and dividends are, the risks of mixing them up, and how to avoid common pitfalls like overdrawn accounts and unexpected tax charges.

What is a Director’s Loan Account (DLA)?

A director’s loan account is simply a record of money that moves between you (the director) and your company, outside of salary and dividends.

For example:

You lend the company £5,000 to cover cash flow - this goes into your DLA as a credit.
You take £2,000 out of the company for personal use, not as salary or dividends - this goes into your DLA as a debit.

At any time, your DLA shows whether the company owes you money (in credit) or you owe the company money (overdrawn).

What are Dividends?

Dividends are payments made to shareholders out of company profits after tax. Unlike loans, they don’t need to be repaid. However, dividends can only legally be paid if the company has enough retained profits.

For example:

If your company made £30,000 profit last year (after Corporation Tax), you can vote to distribute part of that profit as dividends.
If the company has no retained profit, dividends cannot be paid - even if there’s cash in the bank.

Problems When Taking Money the Wrong Way

Here’s where things often go wrong. Many directors treat the company bank account like their own and withdraw cash when they need it, or pay for personal expenditure via the company bank account. But if those withdrawals aren’t properly declared as dividends or salary, they’ll sit in the DLA instead.

That’s not necessarily a problem - unless your DLA becomes overdrawn.

Overdrawn DLAs and the Dreaded S455 Tax Charge

An overdrawn DLA means you owe money to your company. HMRC doesn’t like this, because in effect you’ve borrowed money from your company without paying tax on it.

If your DLA is still overdrawn nine months after your company’s year-end, the company has to pay a special tax charge called Section 455 (S455) tax - currently 33.75% of the outstanding balance.

For example:

You withdraw £10,000 from the company in July.
The company year-end is 31 December.
If that £10,000 hasn’t been repaid by the following 30 September, the company owes £3,375 in S455 tax.

The good news? If you repay the loan later, the S455 tax can eventually be reclaimed - but only after a long delay, which can seriously affect cash flow.

The Benefit in Kind for Loans Over £10,000

If your director’s loan exceeds £10,000 at any point in the tax year, HMRC treats it as a benefit in kind - because you’ve effectively received an interest-free (or low-interest) loan from your company.

That means:

You’ll pay income tax on the notional interest you “should” have paid.
The company must also pay Class 1A National Insurance on the benefit.

The charge is calculated using HMRC’s official interest rate. To avoid this, you can either repay the loan quickly or pay the company interest at least equal to the official rate.

How to Avoid DLA Problems

The key is good bookkeeping and forward planning. Here are our top tips:

✅ Plan your salary and dividends in advance so you know what you can take.

✅ Check profits before declaring dividends - never rely just on bank balance.

✅ Keep your DLA under control by recording every transaction accurately.

✅ Repay loans quickly if you do take money out temporarily.

✅ Work with an accountant who can guide you on the most tax-efficient way to withdraw money.

Why This Matters

Mixing up DLAs and dividends can lead to:

Unexpected personal and company tax bills.
Cash flow headaches for your business.

By understanding the difference and planning ahead, you can take money out of your company with confidence - and avoid nasty surprises.

Need Help With Your Director’s Loan Account?

At CJL Accountancy, we work with limited company owners every day to make sure they’re paying themselves in the most tax-efficient way. Whether you’re worried about an overdrawn DLA, unsure if you can declare dividends, or want to avoid the S455 tax trap, we can help.

�� Get in touch today for clear, friendly advice tailored to your business.

Tax Returns for Landlords: Everything You Need to Know

Mon, 13 Oct 2025 08:30:00 GMT

Being a landlord comes with more than just managing tenants and maintaining properties - it also means staying on top of your tax responsibilities.

Whether you own one rental property or a portfolio, understanding how to complete your tax return as a landlord can save you money, stress, and potential penalties.

In this guide, we’ll cover what landlords need to include on a tax return, key deadlines, allowable expenses, and how to make the process easier.

Who Needs to Complete a Tax Return as a Landlord?

You need to complete a Self Assessment tax return if you earn income from property. That includes:

Renting out a residential or commercial property in the UK.
Letting out a room in your own home (see Rent-A-Room below).
Earning income from overseas property.
Holiday lets, including Airbnb properties.

When Do Landlords Need to File a Tax Return?

The key tax return deadlines for landlords are:

5 October - register for Self Assessment if this is your first year as a landlord (don't panic if you've missed it this year, just register as soon as you can).
31 October - paper tax return filing deadline (rarely used).
31 January - online tax return and payment deadline for the previous tax year.

For example, for the 2024/25 tax year (ending 5 April 2025), your tax return and any tax owed must be submitted by 31 January 2026.

Missing these deadlines can result in automatic penalties and interest, even if you owe no tax.

What Income Do You Need to Declare?

You’ll need to declare all rental income, including:

Monthly rent payments.
Any non-refundable deposits kept.
Income from additional services (e.g. cleaning or parking).

HMRC expects full disclosure, so it’s important to maintain accurate records of all property income and related costs throughout the year.

What Expenses Can Landlords Claim?

Claiming allowable expenses reduces your taxable profit - and therefore your tax bill. Common allowable expenses include:

Letting agent fees
Accountancy fees
Repairs and maintenance (not improvements)
Insurance
Council tax, utilities, and service charges (if paid by you)
Advertising and tenant reference checks

You can also claim a 20% tax relief on mortgage interest paid.

Make sure you keep receipts and records for at least six years in case HMRC asks for evidence.

Details of improvements made should be kept for the future as it may be able to claimed when you sell the property.

Rent-A-Room

If you rent a room in your house where the tenants share facilities with you, you may be able to claim rent-a-room relief. For 2024/25 it's up to £7,500 of gross rental income, or £3,750 each if the income is joint. Any income in excess of this is taxable.

Making Tax Digital (MTD) for Landlords

Making Tax Digital for Income Tax is due to affect landlords from April 2026.

If your gross rental income exceeds £50,000, you’ll need to:

Keep digital records of property income and expenses.
Submit quarterly updates to HMRC.
File a final year-end declaration digitally.

Landlords earning between £30,000-£50,000 will follow in April 2027, and £20,000-£30,000 in April 2028.

Getting used to digital record-keeping now will make the transition much smoother.

Can HMRC Find Out If You Don’t Declare Rental Income?

Yes - and increasingly easily. HMRC use data from letting agents, Airbnb, the Land Registry, mortgage providers, and even online platforms to identify landlords who haven’t declared rental income.

HMRC can go back several years, charge penalties and interest, and in some cases issue higher fines for deliberate non-disclosure. However, if you come forward voluntarily before HMRC contacts you, you’ll usually receive lower penalties and can settle the tax owed under more favourable terms.

If you’re unsure whether you’ve declared everything correctly, it’s always best to get professional advice before HMRC does.

Don't forget to double check who owns the property (there are often cases where one person in a couple has declared all income even though it's jointly owned). People also often mistakenly think they don't need to declare because their mortgage payment means they have no profit, but as it's only a 20% tax relief on the interest, not the whole repayment, there can be a taxable profit.

How to Make Your Landlord Tax Return Easier

Completing your own tax return can be time-consuming and confusing - especially with changing tax rules. Here are a few ways to simplify the process:

Track income and expenses monthly instead of leaving it until the end of the year.
Use accounting software that’s MTD-compatible.
Get professional help - an accountant can identify allowable expenses, ensure accuracy, and help you plan ahead for tax changes.

Need Help with Your Landlord Tax Return?

At CJL Accountancy, we make tax simple.

Whether you’re a first-time landlord or managing multiple properties, we’ll handle your Self Assessment, bookkeeping, and tax planning - ensuring you stay compliant and never pay more tax than you should.

�� Get in touch to find out how we can help make your landlord accounting stress-free.

Directors' Responsibilities Beyond Filing Accounts: What You’re Legally Meant to Do

Mon, 06 Oct 2025 08:30:00 GMT

Many small business owners think being a company director is simply about filing annual accounts and tax returns. But in the eyes of the law (and HMRC), your role carries far more weight.

At CJL Accountancy, we regularly meet directors who aren’t fully aware of their wider duties. Understanding these responsibilities isn’t just about avoiding penalties, it’s about protecting your business, your reputation, and even your personal finances.

Here’s what you legally need to do as a company director, and some common pitfalls to avoid.

1. Keep and Maintain Proper Company Records

By law, directors must make sure the company keeps accurate and up-to-date records. This includes:

Accounting records – income, expenses, assets, liabilities, and supporting documents.
Statutory registers – shareholders, directors, PSCs (people with significant control).
Minutes of meetings and decisions – especially for major business decisions.

⚠️ Poor record-keeping makes it harder to spot financial risks and could trigger penalties. For example, if records aren’t kept for at least six years, the company could face fines or legal action.

2. Act in the Company’s Best Interests

Directors have a legal duty to put the company’s success first. This means:

Acting in good faith and making fair decisions.
Avoiding conflicts of interest (e.g. putting personal benefit ahead of the company).
Considering the impact of decisions on employees, creditors, and shareholders.

⚠️ Treating the company bank account like your own can cause issues with paying HMRC, employees or creditors. There are also tax implications to taking loans from your company.

3. Keep Companies House Records Up to Date

Directors are responsible for ensuring company information is correct and submitted on time, including:

Confirmation statement (annually)
Changes to directors, shareholders, or registered office
Share allotments or transfers

⚠️ Forgetting to file updates can lead to fines or even the company being struck off the register.

4. Personal Liability Risks

While limited companies are designed to protect directors, failing in your duties can remove that protection. In cases of wrongful trading or fraud, you could be held personally liable.

This is why good governance - keeping proper records, acting responsibly, and filing on time - is essential.

Beyond the Basics: More Responsibilities Under the Companies Act

The above are just a few of the key responsibilities for directors. Under the Companies Act 2006, there are wider statutory duties too.

Failing to meet these duties can have serious consequences - from fines and disqualification to personal liability in extreme cases.

Final Thoughts: You’re More Than Just a Box-Ticker

Being a company director is about more than filing accounts. It’s about protecting your business, running it responsibly, and staying compliant with the law.

At CJL Accountancy, we don’t just tick boxes. We advise directors on the practical side of running a company - helping you avoid tax pitfalls, improve cashflow, and grow with confidence.

�� If you’d like a proactive accountant who supports your business beyond the numbers, get in touch with CJL Accountancy today .

The Most Common Tax Mistakes Small Business Owners Make – and How to Avoid Them

Mon, 29 Sep 2025 08:30:00 GMT

Avoid these common tax pitfalls and keep your small business finances stress-free.

Running your own business is exciting - but it also comes with responsibility. One of the biggest challenges many small business owners face is staying on top of their taxes. Over the years, we’ve helped clients untangle tax messes, and the same mistakes crop up time and again.

Here are the most common tax pitfalls we see – and how you can avoid them.

1. Not Saving for Tax

When you’re just starting out, it’s tempting to think of every pound earned as “yours”, but HMRC will want its share. If you don’t put money aside as you go, you could be in for a nasty surprise when your tax bill arrives.

How to avoid it:

Set up a separate savings account and move a percentage of every payment you receive straight into it. As a rule of thumb, 20-30% works for most small businesses, but it depends on your circumstances.

2. Taking Drawings Instead of Salary/Dividends

Many limited company owners don’t realise that simply “taking money out” of the business isn’t the same as being paid properly. Taking drawings can lead to tax inefficiencies or even an overdrawn director’s loan account – with an unexpected tax charge (the dreaded S455).

How to avoid it:

Speak to your accountant about the most tax-efficient way to pay yourself – usually a mix of salary and dividends. That way you’ll stay compliant and avoid paying more tax than necessary.

Note that if you’re self-employed then the post-tax profit is yours and can be withdrawn.

3. Mixing Business and Personal Finances

Using your personal bank account for business transactions might feel convenient at the start but it quickly becomes a bookkeeping nightmare. It’s easy to lose track of income and expenses, and HMRC may question the accuracy of your records.

How to avoid it:

Open a separate business bank account from day one. It makes bookkeeping cleaner, tax returns easier, and gives you a clearer picture of how your business is really performing.

This is even more important for a limited company, the bank account must be in the company name.

4. Registering for VAT Too Late

Some business owners don’t realise they need to register for VAT once their turnover passes the threshold (currently £90,000). Missing this deadline can lead to backdated VAT bills, interest and penalties – a costly mistake.

How to avoid it:

Track your rolling 12-month turnover. If you’re getting close to the threshold, speak to your accountant early. Sometimes it even makes sense to register voluntarily before you’re required to.

5. Missing Out on Allowable Expenses

Too many business owners pay more tax than they should because they don’t claim all the expenses they’re entitled to. From home office costs to business mileage, small savings add up.

How to avoid it:

Keep detailed records and receipts throughout the year. If you’re unsure what you can and can’t claim, ask your accountant – we’d rather help you claim correctly than see you overpay.

Final Thoughts

Tax mistakes are easy to make - especially when you’re juggling everything else that comes with running a business. But with a bit of planning, good record-keeping, and the right advice, you can avoid the most common pitfalls.

At CJL Accountancy, we’ve helped countless small business owners get back on track after making these mistakes – but we’d much rather help you avoid them in the first place.

�� If you’re worried about tax or just want peace of mind that you’re doing things the right way, get in touch today .

Don’t Miss the 5 October Deadline to Register for Self-Assessment 2024/25

Mon, 15 Sep 2025 08:30:00 GMT

Everything you need to know about registering for Self-Assessment before the 5 October 2025 deadline

If you’ve recently started earning income outside of PAYE, the clock is ticking. HMRC requires you to register for Self-Assessment by 5 October 2025 if you need to file a tax return for the 2024/25 tax year. Missing this deadline could lead to penalties, interest, and unnecessary stress.

At CJL Accountancy, we help individuals and business owners stay compliant and avoid last-minute panic. Here’s what you need to know.

Who Needs to Register for Self-Assessment?

You may need to register if you had untaxed income during the 2024/25 tax year (6 April 2024 – 5 April 2025). This can include:

Self-employed businesses
Partners in a business partnership
Company directors who receive dividends or other untaxed income
Landlords earning rental income
Investors with taxable savings, dividends, or capital gains
Side hustlers and content creators making money from Etsy, YouTube, TikTok, or freelancing

If HMRC doesn’t already know about your new income, you must tell them by registering for Self-Assessment.

Why Is the 5 October Deadline Important?

This deadline isn’t when you have to file or pay your tax, that comes later. Instead, it’s about telling HMRC you need to complete a tax return.

5 October 2025 – Deadline to register if you’re new to Self-Assessment for 2024/25.

31 January 2026 – Deadline to file your online return and pay any tax due.

By registering on time, you’ll avoid HMRC penalties and get your Unique Taxpayer Reference (UTR) in plenty of time, which you need to file your return.

How to Register for Self-Assessment

The process depends on your situation:

Self-employed – Register using form CWF1.
Not self-employed (e.g., landlords, investors, directors) – Register using form SA1.
Partnerships – Both the partnership and individual partners must register separately.

You can register online via HMRC’s website, or we can handle the process for you.

What Happens If You Miss the Deadline?

If you fail to register by 5 October, HMRC can issue penalties for late notification. Acting early is the easiest way to stay compliant.

How CJL Accountancy Can Help

At CJL Accountancy, we specialise in helping people and small businesses stay on top of their tax obligations. We can:

Register you for Self-Assessment
File your return accurately and on time
Ensure you claim all allowable expenses
Help you plan for future tax bills so there are no surprises

Don’t Leave It Too Late

If you started earning new income in the 2024/25 tax year, remember: the deadline to register is 5 October 2025. The sooner you act, the smoother your tax return process will be.

�� Get in touch with CJL Accountancy today , and let us take the stress out of Self-Assessment.

Tax and Side Hustles: When Does a Hobby Become a Business?

Mon, 08 Sep 2025 08:30:00 GMT

What does that mean for tax?

Over the past few years, side hustles have become more popular than ever. Whether it’s selling art at local markets, reselling clothes on Vinted, or monetising a blog or YouTube channel, thousands of people across the UK are making extra income outside of their 9-to-5 jobs.

But when does a hobby tip over into a business in the eyes of HMRC, and what does that mean for tax? Let’s break it down.

The Key Test: The “Badges of Trade”

HMRC doesn’t have a single rule that says: “This is a business.” Instead, they look at something called the badges of trade - a set of indicators used to decide whether you’re just enjoying a hobby, or whether you’re carrying on a trade.

Some of the main badges of trade include:

Profit motive – Are you trying to make money, or just covering your costs?
Frequency of transactions – Are you making occasional sales, or selling regularly?
Organisation – Do you advertise, have branding, or run it like a business?
Modifications – Do you change or improve items before selling them (e.g. buying second-hand clothes, then reselling at a markup)?
Nature of the asset – Was what you sold originally bought to keep or to sell?

No single badge proves you’re in business, but taken together they paint a picture.

What HMRC Looks For

HMRC will look beyond the label you put on your activity. Calling it a “hobby” doesn’t mean it won’t be taxed if you’re making money in a structured way.

Some common scenarios:

Selling art or crafts – If you sell the occasional canvas or crochet piece for pocket money, it may be a hobby. But if you regularly list items on Etsy, take commissions, or market yourself on Instagram, HMRC is likely to see this as a business.
Reselling clothes online – Clearing out your wardrobe is fine. But if you buy clothes with the intention of reselling for profit (e.g. thrifting or bulk buying trainers), that looks like trading.
Monetising a blog or YouTube channel – Once you start receiving ad revenue, affiliate income, or sponsorships, HMRC will see this as taxable business income.
Landlords and property income – Even if you only rent out one property, it still counts as taxable income and must be declared.

The Tax Implications

If your hobby crosses into business territory, you’ll need to:

Register with HMRC as self-employed (even if you also have a job).
Complete a Self Assessment tax return each year.
Keep accurate records of income and expenses.
Pay tax and National Insurance on profits above the personal allowance.

The good news is that there are some reliefs:

Trading allowance – The first £1,000 of trading income (gross income, not profit) is tax-free.
Allowable expenses – You can deduct costs like materials, platform fees, and a proportion of home office costs.

Real-World Examples

Hobby: Lucy paints in her spare time and occasionally sells a painting for £50 to friends. She doesn't advertise her paintings. No tax return needed.

Business: Tom resells vintage clothes on Depop every weekend, buying items to re-sell at a profit, and keeping track of his profit margins. HMRC will expect him to register as self-employed.

Side Hustle Scaling Up: Sarah runs a blog. At first, it was just a creative outlet, but now she earns £200 a month from affiliate links. She needs to declare this income to HMRC.

Final Thoughts

If you’re earning money - even a small amount - from a hobby, it’s worth asking: Would HMRC see this as trading?

Failing to declare taxable income could lead to penalties, but getting it right from the start is straightforward with the right advice.

At CJL Accountancy, we help side hustlers, content creators, and small businesses understand their tax obligations, claim the right expenses, and stay compliant without stress.

�� Need help figuring out if your hobby is a business? Get in touch with us today for friendly, expert advice.

A Beginner’s Guide to Crypto from a UK Tax Perspective

Mon, 01 Sep 2025 08:30:00 GMT

Your simple guide to UK crypto tax rules

Cryptocurrency has moved from a niche interest to a mainstream topic. Whether you’re buying Bitcoin for the first time, dabbling in Ethereum, or trading NFTs, you’ll quickly realise there’s one thing you can’t ignore: tax.

In the UK, HMRC treats crypto very differently from traditional currency - and not knowing the rules can land you with unexpected tax bills (and penalties).

This beginner’s guide will walk you through the basics of crypto tax in the UK, so you can stay on the right side of the law.

What counts as crypto for UK tax purposes?

HMRC refers to cryptocurrency as cryptoassets. This includes:

Exchange tokens (e.g. Bitcoin, Ethereum, Litecoin)
Utility tokens (tokens that let you access a service)
Security tokens (tokens representing ownership or debt)
Non-fungible tokens (NFTs)

If you own or trade any of these, you may have a tax liability.

Is crypto taxed in the UK?

Yes - but not in the way you might think. HMRC does not treat crypto as money or currency. Instead, it’s treated more like a form of property or investment.

The two main UK taxes that might apply to your crypto are:

Capital Gains Tax (CGT) – When you sell, swap, spend, or gift crypto.
Income Tax – When you’re paid in crypto or receive it through mining, staking, or airdrops.

Capital Gains Tax on crypto

If you sell or dispose of crypto, you may need to pay Capital Gains Tax. This includes:

Selling crypto for GBP or another currency
Swapping one crypto for another
Using crypto to pay for goods or services
Giving crypto away (other than to a spouse or civil partner)

You only pay CGT on your profits, not the total value. There's a tax free CGT allowance (£3,000 for 2025/26) and you'll pay tax on any gains above this. You can also claim your crypto losses to be used against other capital gains.

Example:

You bought 1 Bitcoin for £15,000

You sold it for £25,000

Profit = £10,000

Rates:

18% for basic rate taxpayers

24% for higher and additional rate taxpayers

Income Tax on crypto

You may need to pay Income Tax if you receive crypto as:

Salary or payment for services
Mining or staking rewards
Airdrops (if received in exchange for doing something, like promoting a project)

In these cases, the value of the crypto at the time you receive it is added to your income and you'll pay income tax and national insurance on your profits.

How HMRC knows about your crypto

HMRC has agreements with major UK crypto exchanges and can request customer data. If you think they won’t find out, think again - it’s safer (and cheaper) to declare your gains correctly from the start.

Record keeping for crypto tax

HMRC expects detailed records for every crypto transaction, including:

Date of transaction
Type of asset
Number of units
Value in GBP at the time
Transaction fees
What the transaction was for (sale, swap, etc.)

Using crypto tax software (like Koinly or CoinTracker) can save hours of admin.

Do you have to pay tax if you haven’t cashed out?

Yes - in some cases. Even if you haven’t converted crypto to GBP, swapping one coin for another or using it to make a purchase can trigger a taxable event.

How to report crypto on your tax return

If you have taxable crypto gains or income:

Register for Self Assessment (if you’re not already registered).
Complete the Capital Gains section and/or Income section of your return.
Pay any tax due by the deadline (31 January following the end of the tax year).

Common crypto tax mistakes to avoid

Thinking “it’s not real money” so it’s not taxable
Forgetting that swaps count as disposals
Ignoring small gains that push you over the allowance
Not keeping records from the start
Missing the tax return deadline

Final thoughts

If you're investing in crypto then you need to understand your tax obligations as it will save you stress, fines, and unwanted surprises later on.

If you’re unsure, speak to a tax professional who understands crypto.

FAQs: Crypto

Q: Do I pay tax when I buy crypto?

A: No. Buying crypto isn’t taxable — tax applies when you dispose of it.

Q: What’s the CGT allowance for 2025/26?

£3,000 per person.

Q: Do I pay tax on crypto losses?

You can offset crypto losses against gains to reduce your tax bill - but you must report them to HMRC.

Q: Can HMRC track my crypto?

Yes. They can request information from UK-based exchanges and international partners.

HMRC Targets Personal Expenditure Add-Backs - What You Need to Know

Mon, 25 Aug 2025 08:30:00 GMT

HMRC is cracking down on personal expenditure in Self-Assessment returns

HMRC’s Campaign: A New Enforcement Focus

HMRC has recently announced a campaign aimed at Self-Assessment taxpayers (sole traders, partnerships and landlords) to discourage claims for personal expenditure disguised as business costs on tax returns for the 2024/25 tax year. This follows a trial in 2024 that generated over £27 million in additional revenue and flagged widespread issue with personal use being misclassified as business expenditure.

The campaign signals HMRC’s intention to ramp up enquiries and investigations into reported personal expenditure, ensuring only wholly and exclusively business-related deductions are claimed.

Why It Matters: The “Wholly and Exclusively” Principle

The crux of HMRC’s stance stems from the long-established “wholly and exclusively” rule, which mandates that expenses must be incurred purely for business purposes to be deductible. Even partial personal benefit can render the claim disallowable unless a clear, separable business-only portion exists.

For example, if a self-employed individual uses a vehicle partly for personal and partly for business purposes, they must adjust their taxable profit by adding back any personal-use portion.

Key Risk Areas for Self-Assessment Taxpayers

There are some cost categories which are more likely have a personal element:

Travel and subsistence - you can only claim business related travel to a temporary workplace, your normal commute to work and lunch in the office is personal - you should keep a mileage log and other evidence of the business purpose for the costs.
Home office - you would typically apportion this based on the number of rooms or floor area, and time spent working - see our separate blog on this here .
Phone and internet - if this is a mobile or home phone/internet, you should split between personal and business use.
Subscriptions - there might be a personal element to subscriptions and things like streaming services and gym memberships accepted by HMRC as business expenses.

How CJL Accountancy Can Help

1. Accurate Expense Classification

We’ll help ensure your expenses genuinely satisfy the wholly and exclusively test, including:

Identifying and separating personal vs business costs (e.g. motoring, heating, phone use)
Making necessary add-back adjustments to taxable profits

2. Robust Record-Keeping

Maintain clear, auditable documentation for all claims
Show evidence of business purpose and usage splits where applicable

3. Proactive Tax Return Review

We’ll review your draft Self-Assessments ahead of submission to flag potential issues. Where mixed-use expenses exist, we'll discuss apportionment strategies with you.

4. Preparation for HMRC Enquiries

If HMRC contacts you, we'll manage communications and provide guidance, and assist in voluntary disclosures if errors are discovered.

Next Steps for Business Owners

Audit your last Self-Assessment: Have you included any dual-use expenses?
Review your records: Ensure your receipts clearly outline business-related use.
Update bookkeeping systems: Track business vs personal costs separately.
Speak to us: CJL Accountancy can help revise past returns before any HMRC contact.

Final Thoughts

HMRC’s current campaign makes it clear: personal expenditure claims are under the microscope. With the right systems, advice, and documentation, you can reduce risk and remain compliant. CJL Accountancy is here to help you navigate this evolving landscape with confidence. Contact us .

How to Switch Accountants (Without the Awkwardness)

Mon, 18 Aug 2025 08:30:00 GMT

Switching accountants is easier than you think.

Many business owners stick with an accountant they’ve outgrown. Maybe your business has changed, your needs have evolved, or you simply want more proactive advice. But here’s the thing: switching accountants is easier than you think - and it’s not awkward at all.

In this guide, I’ll bust the myths, explain how the process works, and show you how we make it simple.

Myth 1: “I have to wait until my year-end to switch.”

Not true. You can change accountants at any point in the year - even mid-tax return or VAT quarter. In fact, switching sooner can help fix problems and get you back on track faster. Your new accountant will pick up where the old one left off.

Myth 2: “It’ll be awkward to tell my current accountant.”

Think of it like switching energy suppliers - it’s a business decision. Your new accountant will usually handle the handover for you. We simply get your permission, contact your previous accountant, and request the records we need. You don’t have to get into a long conversation about why you’re leaving unless you want to.

Myth 3: “It’s too much hassle.”

It’s actually very straightforward:

Choose your new accountant (hopefully us!)
Complete quick Anti-Money Laundering (AML) checks - this is a legal requirement for all accountants
Sign a Letter of Engagement
Give written permission to your old accountant for them to provide information and documents to us
We request your records
We request authorisations from HMRC
You get back to running your business

What Happens When You Switch to CJL Accountancy

When a client joins us, we:

Contact your old accountant directly
Request your accounts, tax returns, and bookkeeping records
Register as your agent with HMRC so we can file on your behalf
Review your current position to make sure nothing’s been missed
Get you set up with clear processes, deadlines, and support
We make sure there’s no gap in compliance

Signs It Might Be Time to Switch

You only hear from your accountant at year-end
You’re not sure what you can and can’t claim as expenses
You’re worried about missing deadlines or penalties
You never get proactive tax-saving advice
You don’t feel like a priority

If any of these sound familiar, it might be time for a change.

Why Switching Now Can Save You Money

A more proactive accountant can:

Spot tax savings you’re missing
Help you pay yourself more efficiently
Keep you ahead of VAT or MTD requirements
Give you better tools for managing your finances

✅ Ready to Make the Move?

Switching accountants is simple, stress-free, and can make a big difference to your business. If you’re ready for:

Clear advice in plain English
Proactive support (not just at year-end)
A friendly accountant who knows your business

�� Get in touch today: Contact Us

We’ll handle the handover - so you can get back to running your business.

I’ve Just Set Up a Limited Company - What Do I Need to Do Next?

Mon, 11 Aug 2025 08:30:07 GMT

So, you've set up a limited company - congratulations! ��

Whether you're a small business owner, content creator, consultant or landlord, this is a big step in your business journey. But what happens after Companies House sends you that confirmation email?

Here’s a practical checklist of what to do after setting up a limited company in the UK, so you stay compliant, organised, and ready to grow.

1. Open a Business Bank Account

Even if you're the only person in the business, you must keep your company finances separate from your personal ones. The company is a separate legal entity.

✔️ Choose a bank or online provider

✔️ Register the account in the company’s name

✔️ Don’t use your personal account for business transactions

�� Why this matters: Using a personal account can cause confusion with tax, accounting, and even trigger unexpected tax charges.

2. Set up an online HMRC account

HMRC will automatically register your company for corporation tax from the information provided to Companies House. You should create a Government Gateway account to manage your company’s tax affairs online. This lets you:

Register for other taxes (like PAYE or VAT)
Appoint an accountant or tax agent
View your company’s tax position and deadlines

To do this:

Search “HMRC login” (check you're on a GOV.UK website)
Click “Sign in” and then “Create sign in details”
Use your company UTR (Unique Taxpayer Reference), which will be posted to your registered address shortly after you form the company

3. Understand Your Responsibilities as a Director

As a company director, you have legal responsibilities - even if you’re the only person involved in the business. You're responsible for:

Filing accounts and a confirmation statement every year
Keeping the company details on Companies House up to date
Paying the correct taxes on time
Keeping accurate company records
Making sure the company is solvent

It’s not as scary as it sounds - but you can’t ignore it. If you don’t meet your obligations, penalties apply.

4. Choose an Accounting Method

You need to keep track of:

Sales and income
Business expenses and receipts
VAT (if registered)
Payroll (if you pay yourself a salary)
Dividends (if you take profits out)

Using a cloud bookkeeping system like Xero, FreeAgent, or QuickBooks makes things easier. Or speak to an accountant (like us!) who can handle it for you.

5. Register for PAYE (If You’re Paying Yourself a Salary)

It's often a good idea to pay yourself a salary via payroll (see our previous blog here ) and top up your earnings with dividends.

To pay yourself a salary, you need to register as an employer with HMRC - even if you’re only employing yourself.

You’ll also need to run payroll each payday and submit reports to HMRC under Real Time Information (RTI).

You’ll also need to:

Run payroll each payday
Submit Real Time Information (RTI) reports to HMRC
Issue payslips and deduct the correct tax and National Insurance

�� Speak to your accountant to make sure your salary/dividend split is tax-efficient and compliant with RTI rules.

6. Consider VAT Registration

You must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period. But even if you're below the threshold, it might still be worth it:

You can reclaim VAT on business expenses
It can make your business look more established
Some clients expect it (especially in B2B services)

Need help deciding? Check out our blog: Beginner’s Guide to VAT for Small Businesses

7. Get Insured

Depending on your industry, you may need:

Professional Indemnity Insurance
Public Liability Insurance
Employers’ Liability Insurance (if you hire staff)

Even if not legally required, insurance can protect you if something goes wrong.

8. Work With an Accountant Early

Setting up a limited company is the easy bit, keeping it compliant is the ongoing job.

A good accountant can:

Help you pay yourself tax-efficiently
Keep you compliant with Companies House and HMRC
Take away the stress of bookkeeping and payroll
Save you money in the long run

At CJL Accountancy, we help directors feel confident and in control, from the moment your company is formed.

✅ Your New Company Checklist

Here’s a quick summary of what to do next:

☑️ Open a business bank account

☑️ Register for HMRC online

☑️ Understand your director responsibilities

☑️ Set up bookkeeping or hire an accountant

☑️ Register for PAYE (if paying a salary)

☑️ Consider VAT registration

☑️ Get the right insurance

☑️ Ask for help before things go wrong

Need Support With Your New Limited Company?

If you’ve just set up a limited company and want to make sure you’re on the right track, we’re here to help.

�� Get in touch today for friendly, jargon-free advice: Contact Us

Making Tax Digital – You Need to Start Planning

Mon, 04 Aug 2025 08:30:00 GMT

HMRC’s digital transformation is well underway and waiting until the last minute could leave you scrambling

If you're self-employed or a landlord, it’s time to start preparing for Making Tax Digital (MTD). Here’s what you need to know, and what to do now.

What is Making Tax Digital?

MTD affects how businesses and individuals keep their financial records and how they submit tax information to HMRC.

Who Does MTD Apply To?

MTD is being introduced in phases. Here’s a breakdown of who’s affected and when:

✅ Already in place:

VAT-registered businesses for VAT submissions (Making Tax Digital for Business - MTDfB )

�� From April 2026:

Self-employed individuals and landlords with annual income over £50,000 (Making Tax Digital for Income Tax - MTD for ITSA)

�� From April 2027:

The threshold drops to £30,000

�� From April 2028:

The threshold drops to £20,000

There were plans to implement for corporation tax in the future too but this has been cancelled.

How do you calculate your annual income?

To work out whether you fall within the scope of Making Tax Digital for Income Tax (MTD for ITSA), you need to calculate your total gross turnover - not your profit.

Self-employment (sole trader income before expenses)
UK property income (rental income before costs)

This does not include:

PAYE income (employment)
Pensions
Dividends
Interest
Any other non-business income

�� Important: You must add together your gross self-employment income and gross property income (if you have both). If the combined total exceeds the threshold, you will fall within MTD for ITSA.

What Are the Key Requirements?

If you're within the scope of MTD for ITSA, you must:

Keep digital records of your income and expenses
Use MTD-compatible software to send tax data to HMRC
File updates quarterly instead of annually
Submit an end-of-period statement and final declaration annually

Why You Need to Start Planning Now

�� Quarterly reporting is a big change

Going from one annual return to five digital submissions (4 updates + 1 final declaration) is a major shift - and not something to leave until the last minute.

�� You’ll need to use software

Spreadsheets are an acceptable digital record, but you'll need compatible software for the submission to HMRC, or to use accounting software such as Xero, Quickbooks, FreeAgent, Sage etc. If you’re switching systems, you’ll need time to get comfortable with the new setup.

�� Better records = fewer mistakes

Digital record-keeping reduces human error, which can lead to fewer HMRC penalties and more reliable cashflow management. The sooner you switch, the better for your business.

�� Deadlines are coming fast

April 2026 might seem far away, but building the right systems and habits now will save you time, stress, and money later.

How CJL Accountancy Can Help

At CJL Accountancy, we help businesses and landlords prepare for Making Tax Digital with:

✅ Advice on whether MTD applies to you

✅ Support choosing and setting up the right software

✅ Ongoing bookkeeping and tax compliance services

✅ Quarterly and annual reporting support under MTD rules

Whether you're unsure if you're affected or already feeling overwhelmed, we’re here to help you navigate MTD with confidence.

FAQs: Making Tax Digital

Q: Do I need to register for MTD?

A: Yes, you’ll need to register when MTD ITSA applies to your income level.

Q: Can I still use spreadsheets?

A: Spreadsheets can be used with bridging software.

Q: What software do I need?

A: You can either:

Use spreadsheets + bridging software, or
Switch to MTD-compatible software like Xero, QuickBooks, FreeAgent or Sage.

We can help you choose the best option.

Q: What if I don’t comply?

A: HMRC will apply penalties for non-compliance, including missed deadlines or failure to keep proper records.

Don’t Wait – Let’s Get You MTD-Ready

Making Tax Digital isn’t going away – and the sooner you act, the easier the transition will be. Whether you’re a landlord or self-employed, CJL Accountancy is here to make things clear, simple, and stress-free.

�� Get in touch today to start your digital tax journey with expert support every step of the way.

VAT for Landlords: What You Need to Know

183:722748240 (Chrissy Leach) — Mon, 28 Jul 2025 08:30:00 GMT

A Simple Guide to VAT for UK Property Landlords

If you’re a landlord or property investor in the UK, you might be wondering:

Does VAT apply to rental income?
When should a landlord register for VAT?
What about VAT on commercial property?

VAT and property can be complex, but understanding the basics could help you make better investment decisions and avoid costly mistakes.

At CJL Accountancy, we help landlords navigate VAT, tax, and property finances with confidence. Here's your essential guide to VAT for landlords.

Is There VAT on Residential Rental Income?

In most cases, residential rental income is exempt from VAT.

This means:

✅ You do not charge VAT to your residential tenants.

❌ You also cannot reclaim VAT on expenses related to residential lettings.

Common residential lettings that are VAT-exempt:

Houses, flats, apartments rented to private tenants
Student accommodation
Housing association lets

However, because the income is exempt, you can't reclaim VAT on:

Repairs and maintenance
Estate agent or letting agent fees
Legal and professional costs

Are There Exceptions for Residential Property VAT?

Yes, if you let out properties as holiday accommodation, you may need to register and charge VAT. See our general VAT guide here.

VAT on Commercial Property

For commercial property, VAT works differently.

Commercial property rental is generally exempt from VAT, but landlords can "opt to tax”, allowing them to:

✅ Charge VAT on rent (typically at 20%)

✅ Reclaim VAT on associated costs (repairs, refurbishments, professional fees)

This is especially useful if:

You’re leasing to VAT-registered businesses
You’ve incurred VAT on refurbishment or construction
You want to recover VAT on professional services

Opting to Tax: Things to Consider

Once elected, the option usually applies for 20 years.
Opting to tax can complicate matters for tenants who are not VAT-registered.
You must formally notify HMRC when opting to tax.

Should a Landlord Register for VAT?

You must register for VAT if your VAT-taxable turnover (from holiday lets, opted commercial property rents, or other taxable activities) exceeds £90,000 in a 12-month period.

If your activities are a mix of exempt (e.g. residential rent) and taxable (e.g. holiday lets, opted commercial property) then it can be complex.

Can Landlords Reclaim VAT?

✅ On residential lettings: No - unless it's a holiday let or part of a taxable business.

✅ On commercial property with an option to tax: Yes - you can reclaim VAT on related expenses.

How CJL Accountancy Can Help Landlords

At CJL Accountancy, we help residential and commercial landlords with VAT registration and compliance.

Quick FAQs – VAT for Landlords

Q: Do I need to charge VAT on residential rent?

A: No, residential rent is usually VAT-exempt.

Q: Do I charge VAT on commercial property rent?

A: Not by default, but you can opt to tax and charge VAT to reclaim expenses.

Q: What about holiday lets?

A: If your holiday let income exceeds £90,000 in 12 months, you must register for VAT and charge it on bookings.

Q: Can I reclaim VAT on a property refurbishment?

A: Only if the property is part of a taxable supply, like an opted commercial property or a holiday let.

Final Thoughts

VAT for landlords can be complex, especially if you have mixed residential and commercial property.

Getting the VAT treatment right can save you money - or help you avoid costly penalties.

Contact CJL Accountancy today to get clear, practical advice for your property business.

VAT for Influencers and Content Creators: What You Need to Know

Mon, 21 Jul 2025 08:30:00 GMT

New to VAT altogether? Start with our Beginner’s Guide to VAT for UK Businesses . This blog looks at the specifics for influencers and content creators.

Do Influencers and Content Creators Have to Pay VAT?

The short answer: Yes, potentially.

In the UK, VAT applies to taxable business activities, and that includes income from:

Brand partnerships
Sponsored posts
Affiliate links
Ad revenue (e.g. YouTube AdSense)
Digital products like presets, courses, or downloads
Merchandise sales

If your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, you are legally required to register for VAT.

�� This threshold includes all your taxable income, not just cash payments - even gifted items or free services in exchange for exposure can count as business income.

Why VAT Gets Complicated for Influencers

VAT for content creators isn’t always straightforward. Here’s why:

1. Gifted PR Products

You might receive PR gifts in exchange for posts or reviews. If there’s a contractual obligation to post, this is income, meaning VAT would be due on the value of the product - even if you didn’t receive cash.

2. International Clients

Many influencers work with brands based outside the UK, which can be complex. If the client is a business based overseas, you might not need to charge UK VAT, but you’ll need to report it properly on your VAT return.

If you're selling digital products to overseas consumers, different VAT rules apply.

3. Platform Earnings

Income from platforms like:

YouTube (AdSense)
TikTok Creator Fund
Patreon

all count towards your VAT threshold, even though some are paid from companies based abroad. And its income when you've earned it, whether you take it out of the account or not.

4. Multiple Income Streams

Most influencers have more than one income stream - sponsored content, ads, affiliate links, merch - and all taxable income contributes to the £90,000 threshold. You'll need to add up all types of income each month.

Should You Register Voluntarily?

Even if you’re under the threshold, voluntary VAT registration might make sense if:

You have significant business expenses (like equipment, software, studio costs).
You work with VAT-registered brands, who can reclaim VAT.
You want to appear more established when negotiating with corporate clients.

But if most of your audience or clients are individuals, VAT registration might mean you have to increase your prices.

VAT Rates Influencers Need to Know

For most influencer services, the standard 20% VAT rate applies, including sponsored content, brand deals, and services.

If you sell digital products, they are usually subject to 20% VAT too. Sometimes they qualify for a reduced or zero rate, but it's rare in this sector.

Making VAT Less Stressful

We get it - VAT can feel like a minefield when you’re juggling content calendars, partnerships, and platform algorithms!

At CJL Accountancy, we can:

Help you track whether you’re nearing the VAT threshold
Advise on VAT treatment for PR gifts and brand deals
Register you for VAT and handle your returns
Make sure you’re compliant with the latest rules on international sales and digital products

Quick FAQs — VAT for Influencers

Q: Do gifted products count towards my VAT threshold?

A: If there’s an obligation to post, HMRC may treat the value of the gift as taxable income - so yes, it could count.

Q: Do I need to charge VAT to overseas brands?

A: Often no, but you still need to report these transactions correctly.

Q: Can I reclaim VAT on my camera, lighting, and subscriptions?

A: If you’re VAT-registered, you can reclaim VAT on qualifying business expenses.

Final Thoughts

As a content creator, keeping up with tax is probably the last thing you want to do - but if your business is growing, VAT isn’t something to ignore. It can be very expensive if you get it wrong or miss going over the threshold.

�� Need help navigating VAT, tax, and everything in between?

Contact CJL Accountancy today — we’ll help you stay compliant so you can focus on creating.

Beginner’s Guide to VAT for Businesses in the UK

Mon, 14 Jul 2025 08:30:00 GMT

If you're starting or growing a business in the UK, understanding VAT (Value Added Tax) is essential. In this beginner’s guide, CJL Accountancy explains everything you need to know, in plain English.

What is VAT?

VAT stands for Value Added Tax. It’s a tax charged on most goods and services sold in the UK. Businesses collect VAT on behalf of HMRC and pay it over periodically, usually quarterly.

Do I Need to Register for VAT?

You must register for VAT if:

Your VAT taxable turnover exceeds £90,000 (threshold as of July 2025) in a rolling 12-month period.
You expect to go over the threshold in the next 30 days alone.

You can voluntarily register before reaching the threshold, which may be beneficial if:

Your customers are VAT-registered businesses.
You want to reclaim VAT on your own business expenses.

�� Check your 12-month rolling turnover regularly. HMRC monitors this, and late registration can lead to penalties.

How Does VAT Work?

When you're VAT-registered:

You charge VAT on your sales (output tax).
You reclaim VAT on your business purchases (input tax).
You submit VAT returns, usually every 3 months.

Example:

You sell a product for £100 + 20% VAT (£20) = £120 to a customer.

You bought materials for £50 + 20% VAT (£10) = £60.

You owe HMRC:

£20 (collected) – £10 (paid) = £10 VAT payable

What Are the Different VAT Rates?

There are three main VAT rates in the UK:

Standard Rate 20% - most goods and services
Reduced Rate 5% - home energy, children's car seats, mobility aids
Zero Rate 0% - food, books, children's clothes, public transport

Some goods and services are exempt from VAT (like insurance, education, and health services).

What is a VAT Return?

A VAT return is a summary of the VAT you’ve:

Charged on sales (output VAT)
Paid on expenses (input VAT)

Most businesses file returns every quarter using Making Tax Digital (MTD) compatible software. CJL Accountancy can help you stay compliant with MTD rules.

What is Making Tax Digital (MTD)?

Making Tax Digital is a UK government initiative to simplify tax reporting. If you’re VAT-registered, you must:

Keep digital records.
Use compatible software to submit VAT returns.

Failure to comply can lead to penalties.

What If I Trade Internationally?

If you buy from or sell to customers outside the UK, VAT rules change:

EU/International sales may be zero-rated for VAT.
You may need to account for import VAT.
There are special rules for digital products and services.

CJL Accountancy offers tailored advice to help your business stay VAT-compliant across borders.

Pros and Cons of VAT Registration

Pros

Can reclaim VAT on business costs
May boost credibility with suppliers
Minimal effect on customers if working with VAT-registered businesses

Cons

More admin and record-keeping
Must charge VAT on sales (higher prices for non VAT-registered customers)
Penalties for non-compliance

How CJL Accountancy Can Help

At CJL Accountancy, we help UK businesses navigate VAT with ease. We can:

Register your business for VAT
Submit VAT returns accurately and on time
Keep you compliant with Making Tax Digital

�� Need help with VAT? Contact CJL Accountancy today for a free consultation.

Quick FAQs – VAT for Beginners

Q: What’s the VAT threshold in 2025?

A: £90,000 in VAT-taxable turnover over 12 months.

Q: Can I reclaim VAT on everything?

A: Not always. Items for personal use or exempt activities may not be reclaimable.

Q: How often do I submit a VAT return?

A: Usually quarterly, unless you’re on a different VAT scheme.

Q: What’s the deadline for filing a VAT return?

A: Usually 1 month and 7 days after the end of the VAT period.

Final Thoughts

VAT doesn’t have to be overwhelming. With the right support and systems in place, it becomes a manageable part of running your business.

At CJL Accountancy, we’re here to guide you through the VAT process, every step of the way.

�� Get in touch today to speak with a friendly accountant who speaks your language.

Companies House Changes 2025: What UK Businesses Need to Know

183:722748240 (Chrissy Leach) — Mon, 07 Jul 2025 08:30:09 GMT

New rules from Companies House are coming. Discover how these will affect your UK company.

Companies House are implementing some of the biggest changes in recent years for limited companies in the UK. These reforms aim to improve transparency, combat economic crime, and ensure greater accountability. As a business owner or director, you must understand how these updates affect you.

Here at CJL Accountancy Limited, we're helping clients across the UK stay compliant and ahead of the curve. Here's what you need to know.

1. New Identity Verification Rules for Company Directors

A key change is the mandatory identity verification for:

All company directors
People with significant control (PSCs)
Anyone filing documents on behalf of a company

This is part of the Economic Crime and Corporate Transparency Act and aims to prevent fraudulent company formations and misuse of the UK corporate register.

What this means for you:

If you're a director or PSC, you'll need to verify your identity through Companies House directly or via an authorised agent. Unverified individuals will not be allowed to act as directors or file information which may lead to late filing penalties and possibly legal action. There's no firm deadline for this at the moment but Companies House say it will be mandatory from the Autumn.

You can complete your ID verification now and you will be given a unique code which is personal to you and can be used for all of your companies.

2. Mandatory Filing via Software

Companies House will soon no longer accept paper forms or outdated digital filing methods. All filings - including confirmation statements, changes to company information, and annual accounts - must be submitted using approved software.

Why this matters:

You’ll need to use approved software that’s compatible with Companies House systems. If you currently file yourself or use basic digital forms, this may require an update.

Our solution:

At CJL Accountancy Limited, we already use compliant filing software to manage submissions for our clients, so you're covered.

3. Changes to Your Company’s Accounting Period

Companies House is tightening the rules on changing accounting reference dates. Right now, companies can routinely extend their financial year, but in the future, this flexibility will be restricted.

You will no longer be allowed to extend your accounting period multiple times in succession or for non-commercial reasons.

Plan ahead:

If you’re considering changing your company’s year-end, talk to us first. We’ll assess the pros, cons, and whether your change would be permitted under the new rules.

4. Filing Your Profit and Loss (P&L) Account

Perhaps the most impactful change is that small and micro companies will now have to file their Profit and Loss account at Companies House from 1 April 2027. At the time of writing, there are news articles suggesting that this requirement may change but the legislation allows for this to be implemented.

Previously, small and micro-entities could file abridged or filleted accounts to keep sensitive information private. These exemptions are being removed to improve transparency.

What’s changing:

Micro and small companies will no longer be able to “fillet” accounts
Your company’s turnover and profits will now be visible to the public

If you'd like limited liability then this will be a cost of achieving that. You may have other options such as operating as a sole trader, partnership or unlimited company. We can talk through these options with you.

How CJL Accountancy Can Help

The upcoming changes may feel overwhelming - but you don’t have to face them alone. At CJL Accountancy Limited, we specialise in helping limited companies stay compliant, reduce stress, and focus on growth.

✅ We file everything through approved software

✅ We ensure your accounts are prepared to the new standards

✅ We keep you informed of all deadlines and rule changes

Why Do I Have a Tax Payment Due in July?

Mon, 30 Jun 2025 08:30:00 GMT

If you’ve recently received a reminder from HMRC about a payment due this July, you might be wondering: "Why am I paying tax in July when I already paid in January?"

Don’t worry - this is completely normal if you’re registered for Self-Assessment. Let’s break it down so you can fully understand why this July payment is due and how Payments on Account work.

What Is the July Payment on Account?

In the UK Self-Assessment system, many taxpayers are required to make Payments on Account - advance payments towards their future tax bill.

Payments on Account help spread your tax liability across the year, instead of paying your entire tax bill in one lump sum after the year has ended.

Who Has to Make Payments on Account?

You’ll usually need to make Payments on Account if:

Your tax bill for the previous tax year was over £1,000, and
Less than 80% of your tax was collected through PAYE or other deductions at source

This typically applies to:

Self-employed individuals
Landlords with rental income
Investors and individuals with significant untaxed income

How Do Payments on Account Work?

Here’s a simple example:

You complete your Self-Assessment for the 2023/24 tax year and owe £4,000.
HMRC assumes your income for 2024/25 will be similar.
You are asked to make two Payments on Account towards 2024/25:

£2,000 due by 31 January 2025 (first instalment)

£2,000 due by 31 July 2025 (second instalment)

When you file your 2024/25 tax return, the actual tax owed is calculated. If you’ve overpaid, HMRC will refund you. If you’ve underpaid, you’ll settle the balance by 31 January 2026.

Payments on Account vs PAYE: Why Is It Different?

If you’ve previously worked under PAYE (Pay As You Earn), tax feels much simpler — that’s because:

Your employer deducts tax and National Insurance from your salary each payday
You’re always paying tax as you earn — in real time
There are no large bills at the end of the year (unless your tax code is wrong)

With Self-Assessment, HMRC needs a way to collect tax on income that isn’t automatically taxed - like self-employment income, rental profits, dividends, or side hustles.

Since your tax isn’t deducted automatically, Payments on Account help HMRC collect your tax in advance based on your previous year’s income, similar to how PAYE collects it throughout the year.

Can I Reduce My July Payment?

Yes. If your income has dropped or you expect to owe less tax for the current year, you can apply to reduce your Payments on Account.

This can help ease cash flow, but you need to be careful - if you reduce your payments too much and still owe more tax when you file your return, HMRC will charge interest on the shortfall.

What If I Can’t Afford My July Tax Payment?

HMRC can sometimes agree to a Time to Pay arrangement, allowing you to spread your tax payments over a longer period. The key is to act early - the sooner you speak to HMRC, the more options you may have.

Quick Recap

The July payment is an advance instalment towards your next tax bill.
Self-Assessment taxpayers usually pay twice a year: January and July.
PAYE employees pay tax automatically throughout the year - Self-Assessment taxpayers don’t.
Payments on Account help HMRC collect tax more evenly across the year.
You may be able to reduce payments if your income has fallen.
Help is available if you’re struggling to pay.

Need help with your Self-Assessment or Payments on Account?

At CJL Accountancy, we help individuals and businesses navigate the UK tax system with confidence. If you're unsure how much you need to pay or whether you can reduce your Payments on Account, we're here to support you.

�� Contact CJL Accountancy Today

Understanding Capital Gains Tax (CGT) on Property Disposals: What You Need to Know

Mon, 23 Jun 2025 08:30:00 GMT

When it comes to selling property in the UK, Capital Gains Tax (CGT) can be a significant consideration. Whether you're disposing of a second home, buy-to-let property, or an inherited asset, it's essential to understand your tax obligations and how to plan effectively. At CJL Accountancy, we’ve put together this simple guide to help you navigate CGT on property disposals.

What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit (gain) you make when you sell or dispose of an asset that has increased in value. It’s the gain that’s taxed, not the total amount you receive.

For example:

You bought a property for £200,000.

You later sell it for £300,000.

Your gain is £100,000 (less any allowable costs).

CGT applies to individuals, partnerships, and trustees. Companies pay Corporation Tax on chargeable gains instead.

When Does CGT Apply to Property?

You may need to pay CGT when you dispose of:

A second home or holiday home.
A rental or buy-to-let property.
A property you’ve inherited and then sold (if it's not your main residence).
Land.

In most cases, you won’t pay CGT on your main home due to Private Residence Relief - but there are exceptions, especially if you've let the property out, used part of it for business, or if it’s grounds are very large.

How is CGT Calculated on Property?

Calculate your gain:

Sale proceeds

– Purchase price

– Allowable costs (e.g. legal fees, stamp duty, estate agent fees, certain improvement costs)

= Chargeable gain

Apply your CGT allowance:

For 2025/26, the annual CGT allowance (Annual Exempt Amount) is £3,000 for individuals. Companies don't get an allowance and it's a different rate for Trustees.

Apply the correct tax rate:

The tax rate you pay depends on your other income in the year. The rates for 2025/26 are 18% in the basic rate band and 24% in the higher rate band.

Example Calculation

Sale price: £350,000

Purchase price: £250,000

Allowable costs: £10,000

Gain: £90,000

Less annual allowance (£3,000): £87,000

If you're a higher rate taxpayer:

CGT due: £87,000 × 24% = £20,880

Reporting and Payment Deadlines

For UK residential property disposals, you need to submit a CGT return to HMRC and pay any CGT due within 60 days of completion. There may be exemptions to this reporting and payment deadline for UK tax residents but non-residents will always need to comply, regardless of whether there is any tax payable or not.

For overseas properties, you will need to submit and pay via your usual annual self-assessment tax return.

Failure to report on time can result in penalties and interest charges.

Reducing Your CGT Liability

There may be ways to minimise your CGT bill, including:

Private Residence Relief (if applicable)
Lettings Relief (limited and specific)
Spousal transfers to utilise both allowances
Timing disposals to maximise allowances and lower rates
Claiming all allowable costs and deductions

Professional advice is highly recommended, especially as property disposals can involve complex rules.

How CJL Accountancy Can Help

At CJL Accountancy, we specialise in helping property owners, landlords, and investors navigate the complexities of Capital Gains Tax. Whether you're planning a sale, need help with reporting, or want to explore tax-saving opportunities, our expert team is here to support you.

�� Contact us today to book a free consultation and ensure your property sale is as tax-efficient as possible.

Rental Property Accounting: Top Mistakes Landlords Should Avoid

Mon, 16 Jun 2025 08:30:00 GMT

Owning a rental property can be a smart investment, but without proper accounting, it can quickly become a headache. Here are the top accounting mistakes landlords make - and how to avoid them.

1. Mixing Personal and Rental Finances

One of the biggest mistakes is using one bank account for both personal and property-related transactions. Keep a separate account for rental income and expenses to stay organised and simplify tax preparation.

2. Poor Record-Keeping

Missing receipts, unclear expenses, and forgotten income entries can lead to overpaying tax or facing HMRC penalties.

Keep detailed records of:

Rental income received
Repairs and maintenance
Mortgage interest
Letting agent fees
Insurance, council tax, and utilities (if you pay them)

3. Not Using Software

Modern accounting software like Xero or FreeAgent can automate much of the bookkeeping, track income and expenses, and generate reports at the click of a button.

4. Ignoring Allowable Expenses

You may be missing out on valuable deductions. Common allowable expenses include:

Property repairs
Accountancy fees
Landlord insurance
Mileage for property visits

Make sure you claim everything you're entitled to, including the tax reducer available for mortgage interest.

5. Forgetting Tax Deadlines

Late submissions or payments can result in penalties. Stay on top of key dates for Self Assessment and ensure you file and pay on time.

At CJL Accountancy, we help landlords maximise profits and stay HMRC-compliant. Get in touch for support tailored to your property portfolio.

Influencer Accounting: Managing Freebies, Affiliate Income & Taxes

Mon, 02 Jun 2025 08:30:00 GMT

In today’s digital world, influencers and content creators have more opportunities than ever to monetise their online presence. But with multiple income streams come multiple responsibilities - especially when it comes to tax. Here’s a simple guide to help you stay on top of your finances and avoid trouble with HMRC.

1. Understand What Counts as Income

Many influencers receive compensation not just in cash, but through gifted items, affiliate links, brand collaborations, and even experiences. It’s essential to know that:

Gifted products and experiences are considered taxable income if you receive them in exchange for promotion.
Affiliate earnings and brand sponsorships must be declared just like any other self-employed income.

2. Keep Good Records

Proper record-keeping is crucial. Track everything, including:

Dates and descriptions of gifted items
Messages/emails around gifts
Contracts of brand deals
Affiliate income reports
Business expenses like camera gear, editing software, and travel

3. Set Aside Tax Money

One of the biggest pitfalls influencers face is failing to plan for tax payments. A good rule of thumb is to set aside 20-30% of all earnings into a separate savings account for taxes.

4. Register as Self-Employed

If you're earning more than £1,000 (before costs) from your influencing activities, you must register as self-employed with HMRC. This allows you to file a Self Assessment tax return and claim allowable business expenses.

5. Work with a Specialist Accountant

Influencer income can be unique and complex. Working with an accountant who understands the digital creator space ensures you're not overpaying tax or missing key deductions.

At CJL Accountancy, we specialise in helping digital creators understand their finances and thrive. Contact us today for a free consultation.

Delayed Tax Refunds: What to Do When HMRC Takes Longer Than Expected

183:722748240 (Chrissy Leach) — Mon, 19 May 2025 08:30:01 GMT

Are you still waiting for a 2023/24 tax refund?

How Long Should a Tax Refund Take?

Typically, HMRC aims to process tax refunds within:

5 working days if submitted online and payment is made directly to your bank
Up to 8 weeks if your return is more complex or requires additional checks

However, during busy periods like January (Self Assessment deadline) or April (end of the tax year), delays are common.

Why Might Your Refund Be Delayed?

There are a number of reasons HMRC might take longer than expected:

Security Checks - HMRC may flag your return for additional verification to prevent fraud. These random checks can delay your refund by several weeks.
Errors or Inconsistencies - if your tax return contains mistakes, mismatched information (such as figures not matching PAYE data), or missing documentation, HMRC may pause the process to investigate.
Outstanding Debts - HMRC may offset your refund against any unpaid tax, student loan, or other government debts. This can lead to a reduced refund—or none at all.
System Backlogs - Especially during peak times, HMRC’s systems and teams get overwhelmed, which causes processing delays across the board.

What You Can Do About It

If you’re facing a delay, here’s how to take action:

Check Your Online HMRC Account - log in to your HMRC personal tax account to check that your tax return has been received, if your refund has been issued or if HMRC has sent you any messages about additional checks or missing info.
Where's my reply - you can check here when you should receive your refund based on how and when it was requested.
Contact HMRC - if the date on Where's my reply has passed, you can contact HMRC to chase the refund. Be sure to have your UTR (tax reference) or National Insurance number handy.

Tips to Avoid Future Delays

File your return early to miss the busy periods
Double-check all figures and details
Make a note of when you should receive your refund and chase as soon as that has passed

At CJL Accountancy, we understand how stressful waiting for money you're owed can be. If your refund has been delayed or if you're unsure whether your return was filed correctly, we’re here to take the stress off your shoulders.

�� Get in touch today for friendly, jargon-free advice and support.

Self-Assessment Penalties: Avoiding the £900 Late Filing Fine

Mon, 12 May 2025 08:30:00 GMT

If the 31 January deadline passed you by this year, it's not too late to act, and avoid mounting penalties.

What Happens If You Miss the Deadline?

2023/24 tax returns were due to be filed by 31 January 2025. HMRC's penalty system is designed to encourage timely filing. Here's what you can expect:

Immediate £100 fine as soon as the 31 January deadline is missed.
£10 per day for up to 90 days starting May 1, 2025 - that's an additional £900 if you still haven’t filed.
Further penalties if your return is more than 6 or 12 months late, based on the tax owed.

Can You Appeal a Penalty?

Yes, but only in certain circumstances. Remember, it's Self-Assessment - it's your responsibility to tell HMRC if you need to file a return, even if they've previously told you that you didn't need to, based on older information.

HMRC will consider appeals if you had a reasonable excuse such as:

Serious illness
Bereavement
Unexpected delays (e.g. postal strikes, software failures)

You must appeal within 30 days of the penalty notice and provide supporting evidence.

What Should You Do Now?

File your return as soon as possible. Even if you can’t pay your tax bill right away, filing stops further daily penalties.
Pay what you can. You’ll reduce interest and might avoid further late payment penalties.
Speak to an accountant. A professional can help you navigate penalties, appeal if needed, and arrange payment plans with HMRC.

To stay ahead of the game next year:

Keep digital records year-round
Use accounting software or outsource to a trusted accountant
Set calendar reminders for key deadlines

At CJL Accountancy , we help individuals and small businesses stay compliant and penalty-free. If you’re unsure what to do next, get in touch for no-obligation support.

Need help with your tax return or penalties? Contact us today - we're here to help you get back on track.

Do I Need an In-House Finance Team?

Mon, 05 May 2025 08:30:00 GMT

In today's dynamic business environment, managing finances efficiently is crucial.

While some companies opt for in-house finance teams, many are discovering the benefits of partnering with external accountants. Outsourcing financial tasks can offer flexibility, expertise, and cost savings.

Cost-Effective Expertise

Hiring an in-house finance team involves significant expenses, particularly if you don’t currently employ any other staff. Costs include salaries, employers’ national insurance (which has increased from April 2025), running payroll, employers’ liability insurance, HR costs, providing benefits and training. Onboarding an employee can also have significant costs and it may not always work out.

In contrast, external accountants provide access to a broad range of financial services without the overhead costs. This approach allows businesses to allocate resources more effectively, investing in growth and innovation.

Access to Diverse Skills and Knowledge

External accountants bring a wealth of experience from working with various industries and clients. This exposure equips them with insights into best practices, regulatory changes, and innovative financial strategies. By leveraging this expertise, businesses can make informed decisions and stay ahead in a competitive market.

Scalability and Flexibility

Business needs fluctuate, and external accountants offer the flexibility to scale services up or down accordingly. Whether it's handling increased transactions during peak seasons or managing complex financial projects, external partners can adapt to your requirements without the need for long-term commitments.

Enhanced Focus on Core Business Activities

Outsourcing financial tasks allows business owners and managers to concentrate on their core competencies. By entrusting accounting responsibilities to professionals, you can focus on strategic planning, customer engagement, and other areas that drive business growth.

Mitigation of Risks

External accountants stay updated with the latest financial regulations and compliance requirements. Their expertise helps in identifying potential risks and implementing controls to mitigate them. This proactive approach ensures financial integrity and reduces the likelihood of costly errors or penalties.

Objective Financial Perspective

An external accountant provides an unbiased view of your financial health. This objectivity is invaluable when assessing performance, planning investments, or considering strategic changes. Their impartial analysis supports sound decision-making and long-term success.

At CJL Accountancy , we are committed to delivering tailored financial solutions that align with your business goals. We can help you navigate the complexities of financial management. Contact us today to learn how we can support your business's financial journey.

10 Signs You Need an Accountant

Mon, 28 Apr 2025 08:30:00 GMT

Here are 10 signs it might be time to bring an accountant on board.

Whether you're self-employed or running a small limited company, managing your finances can sometimes feel like juggling blindfolded. While it might be tempting to go it alone, there comes a time when calling in a professional isn’t just helpful, it’s essential.

1. You're Spending Too Much Time on Finances

If you’re spending hours each week wrestling with spreadsheets, chasing invoices, or trying to decode tax rules, that’s time you’re not spending growing your business. An accountant can help streamline your processes and free up your schedule.

2. You’re Not Sure What You Can Claim

Business expenses can be a minefield. If you're uncertain about what qualifies as an allowable expense (and what doesn’t), you could be missing out on tax relief—or worse, risking a fine. An accountant can help you claim everything you're entitled to.

3. You’re Worried About Making a Mistake

From tax returns to payroll, there’s a lot that can go wrong. If you're constantly second-guessing your figures or dreading HMRC letters, working with an accountant brings peace of mind with accurate, compliant filings.

4. You’re Planning to Grow

Thinking of hiring, investing in equipment, or taking on a new premises? Growth is exciting, but it’s also the perfect time to get financial advice. An accountant can help you plan sustainably and avoid cashflow pitfalls.

5. You’re Not Sure About Your Business Structure

Sole trader or limited company? If you’re unsure which structure is best for you, an accountant can explain the pros and cons, and help you choose the best option.

6. Your Tax Bill Was a Shock

If your last tax bill left you reeling, or you had no idea how much you owed until the deadline loomed, it’s a clear sign you need more proactive financial management.

7. You Want to Pay Yourself Properly

Getting paid from your business isn’t always straightforward. Should it be salary, dividends, or both? An accountant can help you take money out of your business in the most efficient way.

8. You're Not Using Accounting Software

Still using paper cashbooks? An accountant can help set you up with a spreadsheet or easy-to-use accounting software that saves you time, keeps you organised, and gives you a real-time picture of your finances.

9. You Want to Plan Ahead

Whether it’s budgeting, forecasting, or planning for retirement, an accountant can help you look beyond the day-to-day and take control of your financial future.

10. You Just Don’t Like Numbers

And that’s okay! If doing your accounts fills you with dread, it’s a sign to hand them over to someone who actually enjoys it (yes, we exist!).

At CJL Accountancy , we’re here to make your life easier. Whether you’re just starting out or already well established, we can take the stress out of your finances and help you build a stronger business. Ready to stop stressing about your books? Get in touch today and let’s chat.

Why Checking PAYE Tax Codes Matters for Employers & Employees

Mon, 14 Apr 2025 08:30:00 GMT

As we head into a new tax year, it’s important that employers and employees check their tax codes.

What is a PAYE Tax Code?

A PAYE (Pay As You Earn) tax code is issued by HMRC and tells employers how much income tax to deduct from an employee’s salary. It’s your responsibility to check that you’re on the right tax code, not your employer’s.

Most people will have a tax code like 1257L - this is the standard code for the 2025/26 tax year, which gives a £12,570 tax-free personal allowance.

But not everyone will have this code. Reasons for a different code can include:

Having more than one job or pension
Receiving benefits in kind (e.g. company car, private medical insurance)
Underpaid tax from previous years
Marriage Allowance claims
Student loan repayments or adjustments

Other common codes include:

BR – all of your salary or pension will be taxed at the basic rate of tax (currently 20%) – this is common if you change jobs during the year or if it’s a second job
0T – you won’t get any personal allowance with this tax code as HMRC expect your earnings to be over £125,140
D0 – all of your salary or pension will be taxed at the higher rate of tax (currently 40%)
D1 – all of your salary or pension will be taxed at the additional rate of tax (currently 45%)

Tax code letters

The letters at the end of your tax code are for different situations:

L – the numbers show how much tax free allowance you get
K – the numbers show how much additional income you need to pay tax on – this can happen where you have high benefits in kind/low personal allowance
S – Scottish tax rates apply
C – Welsh tax rates apply
W1/M1 or X – your salary or pension will be taxed on a single week/month basis (usually tax is calculated cumulatively for the tax year to date)

Why It’s Important to Check PAYE Tax Codes Before April Payroll

Tax codes are generally cumulative so issues can be fixed easily during the year, but checking and correcting any errors before your April salary is processed means you won’t have any shocks with your first pay of the year.

If you’re not sure what your tax code, sign up to or log into your personal tax account ( https://www.gov.uk/personal-tax-account ).

What Employers Should Do

Although it’s ultimately an employee’s responsibility to check their own tax codes, and you won’t have any information about how the tax code has been calculated, it’s worth reviewing tax codes prior to running the first payroll. This means you’re less likely to have employees querying their pay, HMRC sending updates later and time-consuming adjustments/re-runs.

Download the latest codes
Check for any non-cumulative or BR codes
Check that employees earning more than £125,140 are on a 0T or K tax code
Encourage employees to check their codes

It’s far easier to get it right from the start.

Need Help with Payroll?

We’re here to help. At CJL Accountancy, we offer friendly, expert payroll support as part of our accounting compliance packages so you can focus on running your business without the stress of tax surprises.

Happy (or Not) New Tax Year!

Mon, 07 Apr 2025 08:30:00 GMT

The new tax year began on 6 April 2025 and it's crucial to stay informed about the tax changes that may impact your financial planning.

This year brings several significant tax adjustments, which could affect both individuals and businesses.

Key Tax Changes Effective 6 April 2025

1. Employer National Insurance Contributions (NICs):

- The rate for employer NICs has increased from 13.8% to 15%.

- The threshold at which employers begin paying NICs has decreased from £9,100 to £5,000. This means businesses will incur higher employment costs, potentially influencing hiring decisions and wage structures, ultimately affecting employees.

2. Employment Allowance

- This is an allowance against employers NI and has increased from £5,000 to £10,500.

- It is also open to more employers as you can now claim if your employer NI in the previous year was over £100,000, however, you’re still unable to claim if the only person on the payroll is a director.

3. National Minimum Wage (NMW):

- NMW increased from 1 April 2025 to £12.21 per hour for those aged 21 and over, £10.00 for those aged 18-20 and £7.55 for under 18’s or apprentices.

4. Stamp Duty Land Tax (SDLT):

- The temporary reductions in SDLT stopped on 31 March 2025 so new purchases will be at the higher rates.

5. Business Asset Disposal Relief (BADR):

- BADR is a reduction in capital gains tax for sales of business or company shares (where you’re an employee or director) – various criteria apply.

- The rate has increased from 10% to 14%.

6. Non-Domiciled ('Non-Dom') Tax Status Abolition:

- The government will abolish the non-dom tax regime, which previously allowed certain residents to avoid UK taxes on foreign income. This change may influence the residency decisions of high-net-worth individuals and could have broader economic implications.

7. Late Payment Interest Rates:

- HMRC will increase interest rates on late tax payments to 8.5%, effective from 6 April 2025. This adjustment aims to encourage timely tax payments and ensure fairness among taxpayers.

8. ISA’s

- Although nothing has been announced yet, HMRC are looking at potentially reducing the ISA allowances later in the year.

Tax Rates and Thresholds

The income tax rates and thresholds remain unchanged from previous years rather than increasing in line with inflation which means that people pay more tax as their incomes increase. This is known as fiscal drag.

Implications for Taxpayers

The combination of these tax changes and the effects of fiscal drag underscore the importance of proactive financial planning. Individuals and businesses should:

Review Financial Plans: Assess how the new tax rates and thresholds impact your financial situation and adjust budgets accordingly.
Seek Professional Advice: Consult with tax professionals to explore strategies that mitigate increased tax liabilities, such as tax-efficient investments or restructuring income.
Stay Informed: Keep abreast of tax legislation changes to ensure compliance and optimize financial decisions.

At CJL Accountancy, we are committed to guiding you through these changes and helping you navigate the complexities of the evolving tax landscape. For personalised advice and support, please contact us.

Spring Statement 2025

Mon, 31 Mar 2025 08:30:00 GMT

Chancellor Rachel Reeves delivered the Spring Statement last week and emphasised the government's unwavering commitment to combating tax evasion and avoidance.

Building upon previous initiatives, the Chancellor introduced a series of robust measures aimed at closing the tax gap.

Enhanced Investment in HMRC

The government plans to invest further in HM Revenue & Customs (HMRC), focusing on advancing cutting-edge technology and expanding HMRC's capacity to tackle tax avoidance more effectively. The objective is to increase the number of tax fraud prosecutions by 20%, which is projected to raise an additional £1 billion annually by 2029-30.

Consultation on New Anti-Avoidance Measures

In a move to further tighten the noose on tax avoidance, the government has launched a consultation titled "Closing in on Promoters of Tax Avoidance." This initiative seeks public and professional input on proposed measures that would grant HMRC additional powers and impose stronger sanctions on those promoting tax avoidance schemes. The goal is to disrupt the business models of the few remaining promoters and contribute to reducing the tax gap associated with marketed tax avoidance.

Implications for Taxpayers and Advisors

These developments signal a clear message: the government is intensifying its efforts to ensure compliance and fairness within the tax system. Taxpayers and their advisors should be vigilant and proactive in understanding these changes to avoid inadvertent non-compliance. Engaging with professional advisors who are abreast of the evolving tax landscape is more crucial than ever.

Conclusion

If you’re looking for peace of mind then book a call with CJL Accountancy; we can help you stay compliant.

5 Ways to Use Your Children’s Tax Allowances to Reduce Your Tax Bill

Mon, 24 Mar 2025 21:30:00 GMT

Tax efficiency is an important part of financial planning, and one often-overlooked strategy involves making use of your children’s tax allowances. If structured correctly, you can legally reduce your tax bill by shifting income or assets to your children while staying within HMRC guidelines.

Understanding Children’s Tax Allowances

In the UK, children are entitled to the same tax-free personal allowance as adults. For the 2024/25 tax year, this stands at £12,570. This means that if a child receives income below this threshold, they won’t pay income tax. Additionally, children can benefit from savings allowances, capital gains tax exemptions, and Junior ISAs to grow their wealth tax-free.

Ways to Utilise Your Children’s Tax Allowances

1. Setting Up a Junior ISA (JISA)

Parents and grandparents can contribute up to £9,000 per tax year into a Junior ISA for a child. The income and gains from these investments are tax-free, providing a great way to build up tax-efficient savings for their future.

2. Gifting Assets to Children

Transferring income-generating assets such as shares or property to your child can allow income to be taxed at their lower rate. However, HMRC rules state that if parents gift assets to their children and the income exceeds £100 per year, it will be taxed as the parent’s income. This rule does not apply to gifts from grandparents.

3. Using Trusts for Tax Planning

A discretionary or bare trust can help transfer assets to children while potentially reducing inheritance tax (IHT) liability. A bare trust allows income to be taxed at the child’s rate, while a discretionary trust gives trustees control over distributions.

4. Paying a Salary to Your Child

If you own a business, employing your child in a legitimate role can be an effective way to utilise their personal tax allowance. The salary must be reasonable for the work performed and comply with minimum wage laws. Payments below the thresholds mean no income tax or National Insurance contributions are due.

5. Capital Gains Tax (CGT) Allowance

Children also have an annual capital gains tax allowance (£3,000 for 2024/25). If you gift them assets that appreciate in value, they can sell them and use their CGT allowance, potentially saving tax compared to selling the assets yourself.

Key Considerations and HMRC Rules

1. The £100 income rule applies to parental gifts, but not to gifts from other family members.

2. Gifts to children must be genuine and without strings attached.

3. For business payments, children must be employed in a genuine role with reasonable compensation.

4. Trusts can be complex and may have tax implications, so professional advice is recommended.

Conclusion

Utilising your children’s tax allowances can be a smart way to reduce your tax bill while securing their financial future. However, it’s crucial to comply with HMRC regulations to avoid unintended tax consequences.

At CJL Accountancy, we can help you structure your finances efficiently and legally. Get in touch with us today for tailored tax planning advice!

The Number One Reason Businesses Fail

Mon, 17 Mar 2025 09:30:00 GMT

Starting a business is an exciting journey filled with opportunities, challenges, and, unfortunately, risks. While there are many factors that can contribute to a company’s downfall, one stands out above the rest: poor cash flow management .

Why Cash Flow Matters More Than Profit

Many business owners focus heavily on profitability, which is, of course, essential. However, even a profitable business can fail if it doesn’t have enough cash on hand to cover its obligations. Cash flow is the lifeblood of a business—it ensures that you can pay suppliers, employees, rent, and other operational expenses. A lack of available cash can lead to missed payments, damaged supplier relationships, and even insolvency.

Common Cash Flow Mistakes

Overestimating Revenue – many startups and small businesses make optimistic projections about their sales and revenue. When these projections don’t materialise, they can be left scrambling to cover costs.
Poor Expense Management – spending too much on unnecessary expenses, such as extravagant office spaces or excessive marketing before the business is stable, can quickly drain cash reserves.
Late Payments from Customers – if a business doesn’t have a system in place to ensure timely payments from customers, it can experience serious cash flow shortages. Many small businesses struggle with late or unpaid invoices, which disrupt operations.
No Cash Reserve – a business without a financial cushion is highly vulnerable to unexpected costs, such as equipment breakdowns, economic downturns, or changes in market demand.
Rapid Growth Without Financial Planning – scaling up too quickly without proper financial backing can be just as dangerous as not growing at all. More customers mean more costs—if cash isn’t managed effectively, a growing business can run into serious trouble.

How to Improve Cash Flow Management

Monitor Cash Flow Regularly – keep an eye on cash inflows and outflows to identify potential problems before they become major issues.
Invoice Efficiently – use digital invoicing systems and set clear payment terms to ensure that customers pay on time.
Cut Unnecessary Costs – regularly review expenses and cut back on non-essential spending.
Negotiate with Suppliers – if possible, negotiate better payment terms with suppliers to align outgoing payments with incoming revenue.
Build a Cash Reserve – set aside funds to act as a buffer for unexpected expenses.
Use Accounting Software – automated tools can provide real-time insights into cash flow and help with financial forecasting.

Conclusion

While many factors contribute to business failure, poor cash flow management is the most common and often the most preventable. By keeping a close eye on your cash flow, making informed financial decisions, and planning for the future, you can give your business the best chance of long-term success.

At CJL Accountancy, we help businesses take control of their finances, improve cash flow, and stay on track for sustainable growth. If you need expert advice, get in touch with us today!

Tax-Efficient Director Salaries and Dividends: 2025/26

Mon, 10 Mar 2025 09:30:00 GMT

As a director of a limited company in the UK, determining a tax-efficient strategy for remunerating yourself through salary and dividends is crucial for optimising your personal income and minimising tax liabilities.

Rates and Thresholds for 2025/26

Most of the tax rates and thresholds for 2025/26 are the same as for 2024/25 with a couple of changes:

National Insurance Lower Earnings Limit increased to £6,500 – if you have earnings above this then the year counts towards state benefits including state pension
National Insurance Secondary Threshold reduced to £5,000 – this is the point where your limited company begins paying national insurance
Employers National Insurance rate increased to 15% – your limited company will pay 15% of your salary above £5,000 in employers NI (the employers national insurance rate for benefits in kind is also increased to 15%)
Employment Allowance increased to £10,500 – this allows eligible employers to reduce their employers NI liability by up to £10,500

Considerations:

National Insurance Contributions - a salary above £6,500 ensures you receive a qualifying year for state pension purposes.
Company Profitability - dividends can only be paid from distributable profits. Ensure your company has sufficient profits before declaring dividends.
Employment Allowance Eligibility - generally, companies with more than one employee or those paying NI on employees' earnings may qualify. Single-director companies without additional employees do not qualify.
Tax-Free Childcare – there are income requirements to qualify for this
Pension Contributions – you can only make personal pension contributions up to your UK relevant earnings (up to the annual allowance) so if your salary is low, your tax-efficient pension contributions will also be low. However, employer pension contributions are only restricted to the annual allowance, not your UK relevant earnings.

Recommended Salary and Dividend Strategy

A common tax-efficient approach involves drawing a combination of salary and dividends. This method leverages the personal allowance and typically results in lower NI contributions.

The level that’s most tax-efficient for you will be dependent on your personal and company circumstances.

UK Tax Planning Tips: How to Save Before the End of the Tax Year

183:722748240 (Chrissy Leach) — Mon, 03 Mar 2025 09:30:00 GMT

As we approach the end of the UK tax year on 5 April and a popular limited company year end (31 March), now is the perfect time to review your finances and take advantage of tax-saving opportunities.

Whether you're self-employed, an influencer, a small business owner, or running a limited company, a few strategic moves could reduce your tax bill and improve your financial health. Here are some essential tax planning tips to consider before the deadline.

Maximise Your Allowances

Each tax year, you’re entitled to various tax-free allowances, and if you don’t use them, you lose them. Some key allowances to consider:

Personal Allowance – the first £12,570 of your income is tax-free. Ensure you’re making full use of it, especially if your income fluctuates.
Dividend Allowance – if you receive dividend income, the first £500 is tax-free.

Check out our previous blog about tax-efficient director salaries and dividends for more information.

The Trading Allowance gives £1,000 of tax-free gross income per year from self-employment and the Property Allowance gives £1,000 of tax-free gross income per year from rentals.

If you let a room in your home, up to £7,500 per year can be received tax-free.

There is also a Capital Gains Tax (CGT) Allowance – you can make up to £3,000 in capital gains tax-free before the allowance resets. If you’re planning to sell assets, consider doing so before the new tax year.

Make Pension Contributions

Pension contributions benefit from tax relief whether made by you personally or by your employer/limited company. Check out our previous blog about pension contributions for more information.

Boost Your State Pension

You can pay voluntary National Insurance contributions to fill gaps in your record to boost your qualifying years that are used to calculate your State Pension entitlement.

Claim Employment Expenses

As an employee there are a few tax reliefs that can be claimed against your employment income if your employer hasn’t re-imbursed you:

Professional subscriptions
Working from home allowance – only where your employer requires you to work from home, not where you choose to
Business miles travelled in your own vehicle
Uniform allowance for specific jobs

Claim All Allowable Business Expenses

If you’re self-employed or running a business, ensure you’ve claimed all eligible expenses, including:

Home office costs
Business travel and subsistence
Equipment and software
Marketing and advertising expenses

Check out our previous blogs about costs you can claim for more information, for influencers here , landlords here and others here .

Invest in Business Equipment Before Year-End

Purchasing business-related equipment (such as a new laptop, camera, or office furniture) before your business year end means you can deduct the cost from your taxable profits for the current year, speeding up your tax relief.

Marriage Allowance

If one party to the marriage/civil partnership is a basic rate taxpayer and the other has income below the personal allowance, it’s worth considering whether to apply for marriage allowance. This transfers 10% of the non-taxpayer’s personal allowance to their spouse which saves up to £252 in tax.

Check Your Tax Code

Many people overpay tax due to incorrect tax codes. If you’ve changed jobs, gone self-employed, or received benefits like a company car, it’s worth checking your tax code via HMRC’s website.

Use Your ISA Allowance

If your interest income is above your personal savings allowance or your dividend income is above the dividend allowance, then you’ll be subject to tax on some of your investment income.

You can invest up to £20,000 in an Individual Savings Account (ISA) each tax year, shielding it from income tax and capital gains tax. If you haven’t maxed out your ISA, consider contributing before 5 April.

The personal savings allowance is £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and £0 for additional rate taxpayers. With interest rates increasing recently, some people will be caught out by this.

Tax-Efficient Investments

If you invest in Venture Capital Trusts (VCTs), Enterprise Investment Schemes (EIS) or Seed Enterprise Investment Schemes (SEIS) then there are tax reliefs available up to certain limits. However, it must be noted that these investments can be risky so speak to your financial advisor.

Act Now to Save on Tax

Taking proactive steps before the tax year end can make a significant difference to your tax bill. If you're unsure about the best strategies for your situation, consult a tax professional to ensure you’re making the most of available allowances and reliefs.

Need help with your tax planning? Get in touch today to maximise your savings before the 5 April deadline!

Maximising Pension Contributions: A Smart Tax-Efficient Strategy

Mon, 24 Feb 2025 09:30:00 GMT

With the end of the tax year fast approaching, now is the perfect time to review your pension contributions and take full advantage of the tax benefits available. Contributing to a pension not only helps secure your financial future but also provides valuable tax relief that can reduce your overall tax liability. Here’s everything you need to know about pension contributions and how to maximise their benefits before the 5 April deadline.

How Pension Contributions Reduce Your Tax Bill

Pension contributions benefit from generous tax relief; the key tax advantages include:

Tax Relief on Personal Contributions – you receive 20% tax relief automatically; it gets added to your pension. For example, if you contribute £800, the government add £200 so there’s £1,000 in total.
Additional Tax Relief on Personal Contributions – if you’re a higher or additional rate taxpayer, you can also receive more tax relief. There’s more information about how this works below.
Corporation Tax Savings – employer pension contributions are tax-deductible business expenses, reducing corporation tax liabilities which means it’s a tax-efficient part of your salary package from your limited company.

How Much Can You Contribute?

The amount that can be contributed to your pension and still receive tax relief depends on your earnings and the annual allowance. Your earnings are salary and self-employed profits, not interest, dividends or rental profits.

Everyone can contribute £2,880 to a pension contribution, even if they don’t have any earnings.

Generally the maximum that can be contributed is 100% of your earnings up to a maximum of the annual allowance which is £60,000 for 2024/25.

The annual allowance can be reduced to £10,000 per year if you have flexibly accessed your pension pot or if you’re a high earner.

If you’ve used your annual allowance in the current tax year, you may be able to carry over annual allowances from the previous 3 tax years where they were not used in full.

If you exceed the annual allowance, then you may need to pay a tax charge.

Employer vs. Personal Contributions

Personal Contributions

When you make a contribution to your pension pot, the government add 25%. If you’re a higher or additional rate taxpayer you can also receive additional tax relief. This can either be received via your salary if your pension contribution is deducted from your gross pay, or, if it’s deducted from your net pay or you contribute outside of a salary, you can claim this separately.

Claiming the additional tax relief works by increasing your basic rate tax band and can give up to another 25% of tax relief.

If you file a tax return you can make the claim there. Otherwise, you can make a claim on the HMRC website https://www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments .

Employer Contributions

As long as the whole remuneration package (salary, benefits and pension) is reasonable for the work, employer contributions count as an allowable business expense which will reduce the company tax liability.

Maximising Pension Contributions Before Year-End

With the tax year ending on 5 April, here are some strategies to make the most of your pension contributions:

Top Up Contributions – if you have unused annual allowance, consider making additional contributions before the deadline.
Check Carry Forward Entitlement – if you haven’t maximised contributions in previous years, you may be able to use the carry forward rule to contribute more.
Ensure Employer Contributions are Made – if you’re a company director, ensure pension contributions are processed before year-end to claim tax relief.
Review Pension Investment Strategy – ensure your pension investments align with your long-term financial goals.

Conclusion

Need help with pension planning? We can work with you and your financial advisor. Get in touch today to make the most of your tax-efficient savings!

Tax-Efficient Director Salaries and Dividends: Year-End Planning Guide

183:722748240 (Chrissy Leach) — Mon, 17 Feb 2025 09:30:00 GMT

As the tax year draws to a close on 5 April, company directors should review their salary and dividend strategy to ensure they are operating in the most tax-efficient way. A combination of salary and dividends can help minimise personal tax while making the most of available allowances. Here’s what you need to know to optimise your income before the tax year ends.

Understanding the Salary and Dividend Strategy

As a company director, you can choose how to pay yourself: via a salary, dividends, or a mix of both. Each method has different tax implications, so structuring your income efficiently can lead to significant savings.

Salary – subject to Income Tax and National Insurance but allows you to qualify for state benefits and pension contributions.
Dividends – paid from company profits after Corporation Tax, taxed at lower rates than salary but do not count towards National Insurance contributions or earnings for pension contributions.

Setting a Tax-Efficient Director’s Salary

There are various thresholds to consider when looking at the salary level:

At the National Insurance (NI) Lower Earnings Limit (£6,396 for 2024/25) – no NI contributions due, but qualifies for state benefits (including state pension).
Below the NI Secondary Threshold (£9,100 for 2024/25) – employers NI becomes payable if salary exceeds this amount.
Below the NI Primary Threshold (£12,570 for 2024/25) – no personal tax or employees NI to pay, but employers NI would be payable.
Below the tax Higher Rate Threshold (£50,270 for 2024/25 as long as total income doesn’t exceed £100,000) – basic rate tax only (20%) but employees and employers NI would be payable.

For many directors, the optimal salary level is £12,570 (within the personal allowance), while ensuring employer NI contributions are considered.

If you have children you may also wish to consider the tax-free childcare rules which are based on your income level.

Taking Dividends Tax-Efficiently

After taking a salary, dividends can be used to extract additional income from the business in a tax-efficient way. Key points to consider:

Tax-Free Dividend Allowance – the first £500 of dividends (2024/25) is tax-free.
Dividend Tax Rates - basic rate: 8.75% (for income up to £50,270), higher rate: 33.75% (for income between £50,270 - £125,140), additional rate: 39.35% (for income above £125,140)
Ensure Sufficient Retained Profits – dividends must be paid from post-tax profits, so check company finances before issuing dividends.

Year-End Planning Considerations

With the tax year ending soon, consider these steps:

Use Your Tax-Free Allowances – ensure you use the full personal allowance (£12,570) and dividend allowance (£500) where possible before they reset; they can’t be carried over.
Balance Salary & Dividends – ensure you extract income in the most tax-efficient way, keeping personal and business taxes low.
Consider Pension Contributions – employer pension contributions are a tax-efficient way to extract profits from the business. Next week’s blog will be about pension contributions so watch this space.

Plan Ahead for 2025/26

We’ll be posting an updated blog next month looking at planning for the 2025/26 tax year. The employers NI threshold is changing from 6 April 2025.

Take Action Before 5 April!

Now is the time to review your strategy to ensure you maximise tax efficiency before the end of the tax year. If you need tailored advice on the best approach for your business, book a call with us today.

Side Hustles and HMRC

183:722748240 (Chrissy Leach) — Mon, 10 Feb 2025 09:30:01 GMT

What Information Does HMRC Receive from eBay, Etsy, Vinted & Other Online Platforms?

If you sell on platforms like eBay, Etsy, Vinted, or Amazon, you may have heard that HMRC is increasing its scrutiny of online sellers. This has led to some confusion, with many wondering if the tax rules have changed. The rules around declaring income haven’t changed—but HMRC is now receiving more data than ever from these platforms.

What Information Is Shared?

Online selling platforms must report seller information to HMRC under new international rules designed to improve tax transparency. These platforms will share details about:

Your total sales and transactions
How many items you’ve sold
The bank account linked to your payouts
Your name, address, and tax identification details

If you sell regularly or earn significant amounts, HMRC will be able to see this and may contact you if they believe you should be paying tax.

Have the Tax Rules Changed?

No—the tax rules haven’t changed. The UK has always required individuals to declare income from self-employment or business activities. What has changed is HMRC’s access to data, making it easier for them to identify sellers who may not be complying with the rules.

If you’re selling items occasionally, such as clearing out unwanted clothes or second-hand goods, you won’t need to pay tax. But if you’re running a business—buying items to resell, making products for sale, or selling regularly with the intent to make a profit—you may need to declare your income.

There is a £1,000 trading allowance which means you can earn up to £1,000 of gross income (before deducting any costs) tax-free each year. If you earn more than that, you’ll need to declare and pay tax on the profits.

What Should You Do If You Think You Owe Tax?

If you realise that your online sales meet the criteria for taxable income, the best thing to do is act now.

Register for Self-Assessment
Keep accurate records – Track all your sales, expenses, and profits. Most platforms provide sales reports, but it’s a good idea to keep your own records too.
Submit your tax return on time – The deadline for online submissions is 31 January following the end of the tax year. Late returns or unpaid tax can result in penalties.

Need Help With Your Taxes?

If you’re unsure whether your sales count as trading or need help with your tax return, CJL Accountancy is here to help. We specialise in supporting small businesses, self-employed individuals, and online sellers.

Get in touch today for expert advice on staying compliant and keeping your tax affairs in order!

Self-Assessment Tax Payment Deadline: Everything You Need to Know Before 31 January 2025

Mon, 20 Jan 2025 09:30:00 GMT

Don’t forget that the tax payment deadline for the 2023/24 tax year is 31 January 2025!

Whether your tax return has been filed already or not, if you have a tax liability for the 2023/24 tax year, the payment is due by 31 January 2025.

If you pay payments on account, your first payment for the 2024/25 tax year will also be due by 31 January 2025. This is relevant if your 2023/24 tax liability was over £1,000 and you don’t have 80% of your tax paid via payroll.

What Happens if You Miss the Deadline?

If you miss the 31 January 2025 deadline, it can be costly.

HMRC will charge interest (the current rate is 7.25%) until the liability is paid.

If you have any tax still owing after 30 days (2 March 2025) then there is also a penalty charged at 5% of the tax due.

Another 5% penalty is charged after 6 months and another 5% after 12 months for any tax still owing.

What Should I Do?

We would recommend logging into your self-assessment account to check whether your tax return is filed and if you owe any tax.

If you don’t have a self-assessment account set up yet, you can create one on the HMRC website.

If you have an accountant, they’re likely to have contacted you if you have a payment to make but you can also check with them.

What If I Can’t Afford My Tax?

If you have tax to pay but can’t afford it then it’s worth setting up a Time to pay agreement with HMRC as soon as possible, ideally before the payment deadline. You can do this by searching HMRC time to pay on the internet (make sure you’re on the official gov.uk website).

This suspends the late payment penalties as long as you keep up with the agreed payments. Interest will still be payable.

Why Work with CJL Accountancy?

Tax can be complex, especially if you’re juggling multiple income streams or navigating HMRC’s ever-changing rules. At CJL Accountancy, we specialise in helping influencers, landlords, and small businesses maximise their tax efficiency.

We encourage early tax return preparation and in year calculations where relevant so that you have time to plan for your tax payments.

We will advise on the costs you can claim to ensure that you don’t pay more tax than necessary.

Act Now: Don’t Wait Until the Last Minute

With less than two weeks to go, make sure you know if you have a tax payment to make.

Let CJL Accountancy take the stress out of your tax return. We’re not guaranteeing 2023/24 tax returns at this late stage but contact us if you’d like help with your 2024/25 tax return. Getting an accountant in place early will mean there’s plenty of planning time to maximise allowances, reduce your tax and plan for payments.

Do Influencers and Content Creators Pay Tax?

Mon, 13 Jan 2025 09:30:00 GMT

If you're an influencer or content creator in the UK, it's essential to understand your tax obligations. This blog will answer some of the most common questions and help you navigate the sometimes-confusing world of tax.

Do influencers have to pay tax?

Yes, influencers and content creators must pay tax in the UK if they make a profit. HMRC treats earnings from social media as taxable income, similar to any other form of self-employment.

Whether you're earning money through brand deals, affiliate marketing, sponsored posts, ad revenue, or even freebies, these could all be considered taxable income.

What counts as taxable income?

Taxable income can include:

Cash payments from brands or platforms like YouTube or TikTok
Free products or services provided in exchange for promotion (yes, that PR box or free hotel stay is taxable if it's part of a business deal)
Affiliate earnings from links or codes
Event appearance fees
Monetisation features such as TikTok’s Creator Fund or YouTube AdSense payments

What tax do influencers pay?

Income tax - paid on profits (income minus allowable expenses)
National insurance contributions (NICs) - payable if your profits exceed £12,570
VAT - if your income exceeds £90,000 in a 12-month period, you must register for VAT

Can I deduct expenses?

Absolutely! As a content creator, you can deduct allowable business expenses to reduce your taxable income. They must be wholly and exclusively for your business. Common examples include:

Equipment such as cameras, microphones, and lighting
Software subscriptions (e.g. editing tools)
Internet and phone bills (proportionate to business use)
Travel expenses for work-related trips
Office supplies or rent (if you work from home, you can claim a portion)

Keeping detailed records is crucial to ensure you claim all legitimate expenses and avoid issues with HMRC.

What do I need to do?

You’ll need to register as self-employed with HMRC and then file an annual self-assessment tax return. The tax year runs from 6 April to 5 April and tax returns need to be filed by the next 31 January.

Tax payments are due by 31 January and you may also need to make a payment on account by 31 July if your tax liability is over £1,000.

If you're unsure whether you should register or need help with the process, get in touch.

What happens if I don’t pay tax?

Failing to declare income can lead to HMRC charging penalties and interest and ultimately it is a criminal offence to evade taxes.

To avoid this, make sure you keep accurate records of all income and expenses, set aside money for tax, and file your returns on time.

Why work with an accountant?

Navigating the tax system can be overwhelming, especially when your income streams come from multiple sources. An accountant experienced in working with influencers can help you:

Maximise your tax efficiency by claiming all allowable expenses
Understand your VAT obligations if you’re nearing the threshold
Avoid pitfalls like underpayment or late submissions
Stay on top of changes in tax laws

Conclusion

As an influencer or content creator, paying tax is a legal requirement and an important part of running your business. By staying informed and organised, you can ensure you remain compliant while maximising your earnings.

If you’re unsure where to start, we’re here to help. As accountants specialising in influencer tax, we understand the unique challenges of your industry. Get in touch today to ensure your finances are in safe hands!

Do Landlords Pay Tax?

Mon, 06 Jan 2025 09:30:00 GMT

If you're a landlord in the UK, it's essential to understand your tax obligations. Whether you own property individually or through a company, the tax system can seem complex, but staying compliant is crucial to avoid fines and penalties.

Taxes for Landlords

Several taxes need to be considered when you own investment property:

1. Income tax or corporation tax on rental profit

2. Capital gains tax or corporation tax on disposals of property

3. Stamp Duty Land Tax (SDLT) on purchases of property

Income tax or corporation tax on rental profit

If you own investment property personally then profits will be subject to income tax at the non-savings rates (the same as for employment income) and the rate you pay depends on the level of your other income (20%-45%).

If you own investment property through a company then profits will be subject to corporation tax (19%-25%).

Profits are calculated by taking the gross rental income and deducting expenses that relate to the rental (for example agents fees, maintenance).

The main difference between the profit calculation for individuals and companies is for mortgage interest (any capital repayment is not an allowable cost). For companies, the mortgage interest can be deducted from profit just like any other relevant expense so tax relief is provided at the corporation tax rate payable. For individuals, mortgage interest is a tax reducer at 20%, regardless of your personal tax rate, which has reduced tax efficiency for higher and additional rate taxpayers.

Selling your property

If you sell personally owned property then it will be subject to capital gains tax (CGT) at 18%-24%. Additionally, you may be required to file a CGT return with HMRC within 60 days of completion and pay CGT by the same date. This is relatively new and so lots of people are being caught out by this and there are penalties charged for late filing/payment.

If you sell property owned in a company then it will be subject to corporation tax at 19%-25%. The disposal will be filed with HMRC on the usual corporation tax return and tax paid at the usual payment date.

The amount subject to tax on disposal will be the proceeds less any costs of sale, less the acquisition cost and any costs of acquisition. There are situations where the proceeds will be market value rather than the actual money paid and the acquisition cost can change depending on how the property was acquired. Individuals receive a tax free allowance, currently £3,000 (2024/25) for capital gains.

Stamp Duty Land Tax (SDLT)

SDLT is payable when property is purchased (and sometimes even if it’s gifted) and is based on the purchase price or market value. There is a surcharge on the usual rates for individuals with multiple properties or for companies purchasing property.

This is an allowable cost that can be claimed as an acquisition cost when the property is disposed of.

Jointly owned property

If property is jointly owned then the profits can be split between them based on the share of property that they own or another share that they choose. However, if those people are married or in a civil partnership then any profits are automatically split 50:50. The only way to change this is by signing a legal document and filing Form 17 with HMRC.

If you have been declaring your income incorrectly then we can help with the disclosure to HMRC to correct the position.

Property investment companies

If you already own property via a company or are thinking of building a property portfolio then please get in touch to discuss. You should be aware that any profits/properties in the company belong to the company and withdrawing funds or using the property personally will have tax implications, so you need the right advice.

Conclusion

Yes, landlords do pay tax, but understanding the system can help you manage your obligations effectively and even reduce your liability. Whether you hold properties personally or through a limited company, careful planning is essential to maximise your investment returns while staying within the law.

If you’re a UK landlord seeking expert advice on your tax obligations, contact us today. We specialise in helping landlords navigate the tax landscape and can tailor our advice to suit your unique circumstances.

Do I Need a Business Bank Account?

183:722748240 (Chrissy Leach) — Mon, 16 Dec 2024 09:30:00 GMT

As a landlord or sole trader, managing your finances effectively is crucial for staying on top of your tax obligations, understanding your cash flow, and growing your business.

Do you need a business bank account for this?

Even if it’s not legally required, having a separate account for your business can make a huge difference. Let’s break it down.

When is a business bank account legally required?

If you operate as a limited company, you are legally required to have a business bank account. This is because a limited company is a separate legal entity, and its finances must be kept distinct from your personal funds.

If company funds are paid into a personal account then you’ve already withdrawn funds from the company which has tax implications.

However, if you’re a sole trader or a landlord managing property income (not through a limited company), there’s no legal obligation to have a business bank account. That said, there are several reasons why it’s highly recommended.

The benefits of a business bank account

Clearer financial records - keeping your business and personal finances separate simplifies your bookkeeping. This makes it much easier to track income and expenses, which is essential for accurate tax returns.
Professionalism - a business bank account gives you a more professional image. Clients, tenants, or suppliers may feel more confident when they see payments or invoices associated with a business account rather than a personal one.
Better financial control - with a dedicated account, you can monitor your business cash flow at a glance. This helps you budget, identify trends, and avoid overspending.
Tax efficiency - having separate accounts simplifies the process of claiming business expenses. With everything in one place, you’ll avoid missing deductions and reduce the risk of HMRC queries.
Access to business banking perks - many business bank accounts offer features like invoicing tools, integrations with accounting software, and tailored business loans or credit options.

Making Tax Digital (MTD)

With MTD being introduced from April 2026 for landlords and sole traders, having a separate business bank account will make it much easier to record your transactions digitally and file the quarterly returns with HMRC. If you're using software then you can usually link your account so the transactions are pulled in automatically or if you're using spreadsheets then you could download the transactions from that account. You can read more about MTD in our previous blog here .

How many business bank accounts should I have?

For limited companies, sole traders and landlords it may also be worth having multiple business bank accounts for two reasons:

Funds protection – the Financial Services Compensation Scheme that covers you when banks fail also covers business accounts. You could open bank accounts with more than one financial institution to spread your funds. If one bank is having any technical issues it also reduces the impact on you.
Tax savings – it’s useful to have a second account to save for tax liabilities. You could move an amount each time you receive rent or revenue to cover your self-assessment or corporation tax liability at the end of the year, or VAT liabilities at the end of the quarter.

Conclusion

While it’s not mandatory for sole traders or individual landlords, having a separate account is a good idea for most. The benefits in terms of organisation, professionalism, and tax efficiency far outweigh the small costs or effort involved in setting one up.

Charity Donations: A guide for higher and additional rate taxpayers

Mon, 09 Dec 2024 09:30:00 GMT

As a higher or additional rate taxpayer in the UK, it’s worth tracking your donations as there may be tax relief available.

How gift aid works
When you donate to a UK-registered charity and tick the Gift Aid box, the charity can claim an extra 25% on your donation from HMRC. For example, if you give £100, the charity receives £125 at no extra cost to you.

As a higher or additional rate taxpayer (earning over £50,270 annually), you’re entitled to claim additional tax relief. While the charity claims back tax at the basic rate (20%), you can claim back the difference between the basic rate and your higher rate (40% or 45%) on your grossed-up donation. This means that £100 donation gives tax relief of £25 for higher rate taxpayers or £31.25 for additional rate taxpayers.

If you donate goods to charity shops you can often log this on your record and they’ll send an email at the end of the tax year telling you how much they’ve sold your items for and therefore your donation amount.

Additional tax benefit

If your total income is between £100,000 and £125,140, this is called the ‘tax trap’ and you’re paying tax at 60% on that portion of your income because the tax-free personal allowance is tapered and reduces by £1 for every £2 of income above £100,000.

Making and claiming gift aid donations can provide tax relief for this. Your £100 donation now provides tax relief of £50.

Tax relief summary

Here is a summary of the tax relief on a donation of £100 where the charity will receive £125.

 Benefits of tracking donations

As you can see, depending on your level of income and donations you’re making, it’s likely to be worth tracking your donations and accessing the tax relief. You can track by putting them in a folder on your email app, or using the notes app on your phone, anywhere that you’ll remember where they are when you’re gathering the information for your tax return.

How to claim

You can claim for donations made in the tax year on your tax return for that year. In addition, you can claim for donations made since the year end by carrying the donation back to the prior year. This is particularly efficient if your income is in the tax trap one year but unlikely to be at the same level the next year.

If you don’t file a tax return

You can still claim the tax relief if you don’t file a tax return by contacting HMRC. They can prepare a tax calculation and include it in your tax code.

Conclusion

Charitable giving is a win-win for higher-rate taxpayers; you support causes close to your heart while benefiting from generous tax relief. By keeping a clear record of your donations, you can maximise your impact while reducing your tax liability.

If you need guidance on tracking your charitable giving or help with your self-assessment, feel free to get in touch. Let’s ensure your generosity is as tax efficient as possible!

What Happens If My Tax Return Is Late?

Mon, 02 Dec 2024 12:41:03 GMT

Self-assessment tax returns for the 2023/24 tax year are due to be filed by 31 January 2025. With busy schedules and unexpected challenges, it’s easy to miss the deadline. If you’re wondering what happens if your tax return is late, this guide will break down the potential consequences and explain how to minimise penalties.

Penalties for late filing

If filed after 31 January - £100 fixed penalty

Missing the deadline immediately triggers a £100 fine, regardless of whether you owe tax or not.

If filed after 30 April - £10 daily penalties

If your tax return is still outstanding after three months, HMRC may charge penalties of £10 per day (up to £900).

If filed after 31 July - £300 minimum additional penalty

If your tax return is still outstanding after six months HMRC can charge the greater of:

5% of the tax due, or
An additional fixed penalty of £300.

If filed after the next 31 January - £300 minimum additional penalty

If your tax return is still outstanding after twelve months, HMRC can charge the greater of:

Another 5% of the tax due, or
An additional fixed penalty of £300.

If HMRC assess that you’re deliberately withholding information, charges can increase up to 100% of the tax due.

How to avoid or minimise penalties

Check your online HMRC account. Even if you don't think you need to file a tax return, if HMRC have issued one, you'll need to file a return or contact HMRC to cancel it.
Start collating your tax information as early as possible so you can be organised and meet the 31 January deadline.
File your return as soon as possible. Even if the deadline has passed, submitting your tax return quickly can prevent further penalties from accumulating.
If you’re waiting for some information, consider filing a provisional return before the deadline.
You can appeal a penalty if you have a reasonable excuse for filing late, such as serious illness, bereavement, or technical issues with HMRC’s systems. Make sure to provide evidence to support your claim.

Conclusion

Missing the self-assessment deadline can result in costly penalties, but acting quickly can help minimise the impact.

Need help filing your tax return? As experienced accountants, we’re here to make the process simple and stress-free. Contact us today to get started. We'll be closing our doors for the 2023/24 tax year on 16 December 2024 so act now!

Tax Treatment of Christmas Parties

183:722748240 (Chrissy Leach) — Mon, 25 Nov 2024 20:33:14 GMT

As the festive season approaches, many businesses plan Christmas parties to reward employees and foster team spirit. While these events are a great way to celebrate the year, it's essential to understand the tax implications to ensure your generosity doesn’t result in unexpected costs, for you or your employees.

The good news is that HMRC provides a tax exemption for annual staff events like Christmas parties. To qualify as tax-free:

All employees must be invited
Total cost must not exceed £150 per employee (including VAT), per tax year
The event must be held annually, such as a Christmas or summer party, rather than one-off occasions

The exemption applies whether the company is a small startup or a larger limited company, as long as these conditions are met. However, if you’re self-employed then this exemption doesn’t apply, even if you have paid employees.

Guests

Don’t get caught out by the £150 per head limit

Firstly, it’s an exemption, not an allowance. This means that if your party is £151 per head, it doesn’t qualify. You can’t claim £150 as exempt and £1 as taxable.

It’s also an annual limit per tax year so if you have multiple parties, they must not exceed £150 per head in total.

The cost per head is calculated as follows:

Add up the total event costs - this includes venue hire, food, drinks, transport, and any other associated expenses, plus VAT.
Divide by the number of attendees - include all guests in the calculation, such as employees and their partners if invited.

VAT treatment

If your company is VAT registered, you should be able to reclaim VAT on the Christmas party costs. However, if the party is only for directors as there are no other employees, the VAT will not be allowable. Where guests are invited, the costs must be apportioned so that only the employee element is claimed.

Exceeding the limit

If the cost per head exceeds £150, the entire amount becomes a taxable benefit for employees and the company will need to pay additional national insurance contributions. Alternatively, the company can settle the tax liability on behalf of employees using a PAYE Settlement Agreement (PSA).

Christmas gifts

If you’re also planning to give gifts to your employees, consider the trivial benefits exemption:

Gifts must cost no more than £50 per employee.
They cannot be cash or cash vouchers.
Gifts must not be a contractual entitlement or a reward for performance.

You can read more about this in our previous blog here .

Conclusion

Christmas parties are a fantastic way to boost morale and celebrate your team’s hard work. By understanding the tax rules and keeping within the limits, you can ensure your festive celebrations are both enjoyable and tax efficient.

If you need further advice on organising tax-efficient staff events or understanding employer obligations, feel free to reach out. We’re here to help your business make the most of the festive season!

Working From Home Expenses for Limited Companies

Mon, 18 Nov 2024 09:30:00 GMT

If you run your limited company from home, you’ll likely have increased household costs. How much can you claim?

Our previous blog looked at working from home expenses for the self-employed which you can read here . For limited companies it’s a little more complicated as the company is a separate legal entity.

There are three options for claiming:

The fixed rate allowance

As a director, you can claim £6 per week from the company for working from home costs which is an allowable expense for the company against corporation tax and it is not chargeable to income tax for you.

However, you can only claim this if the company does not have a business premises.

Actual costs

You can claim a proportion of your costs including gas, electricity, water, telephone and internet. You’ll need to use a reasonable method of dividing your costs, for example by looking at the number of rooms you use for your business and the time that you spend working from home.

Unlike for the self-employed, you cannot claim a proportion of rent, mortgage interest or council tax as these are considered to be fixed costs and don’t increase as a result of working from home.

It’s important to keep records of the costs and the method used to divide the costs in case HMRC asked to see it.

Rental agreement

The other option is that you can charge your company rent to use part of your home.

You would need to put a rental agreement in place that is signed by both parties and is at a commercial rate. The company then pays you rent at the agreed rate and this is an allowable expense in calculating your company profits.

The rent that your company pays is rental income for you personally and needs to be declared on your personal self-assessment tax return. Ideally the income will be eliminated by the actual costs incurred and therefore no tax will be payable but it will still need to be declared.

Other points to consider if you’re looking at the rental agreement option:

You may need to check any rental agreements or mortgages to ensure that you’re allowed to run your business from home.
You should check if there is any effect on your home insurance policy.
There may be capital gains tax payable if you use part of your home solely for business purposes.
You should check that your home would not become subject to business rates.

Important points to remember for claiming working from home expenses

Keep accurate records - document all expenses, including how you calculated business use.
Only claim for business use - HMRC is strict about claiming only the portion of costs genuinely associated with business activities.
Review your claims annually - as your working pattern and expenses may change, it’s worth reviewing your home working claims each year to ensure they are still accurate.

Need help? Get in touch

Navigating home working expenses can be complicated, especially with changing HMRC rules. We can help you ensure you’re claiming the maximum allowable expenses.

Working From Home Expenses

Mon, 11 Nov 2024 09:30:00 GMT

If you’re self-employed, you may be working from home, and you’ll likely have increased household costs as a result. How much can you claim against your business profits?

There are two options for claiming:

Proportion of actual costs

You can claim the business proportion of your costs for things like:

Gas and electricity
Water
Council tax
Mortgage interest (not the capital repayment) or rent
Internet and telephone

You’ll need to use a reasonable method of dividing your costs, for example by looking at the number of rooms you use for your business and the time that you spend working from home.

It’s important to keep records of the costs and the method used to divide the costs in case HMRC asked to see it.

Also note that if you have rooms that you use solely for your business, this may effect your eligibility for private residence relief where you own your home so it’s a good idea to also have personal use of the rooms if possible.

Simplified expenses

You can avoid the complex calculations above by using simplified expenses which is a flat rate based on the number of hours you work from home each month. You do not need to prove any costs to HMRC as they have set the rates, although you may be asked to justify the number of hours if HMRC believe them to be inflated.

The current rates are as follows:

25 to 50 hours £10 per month

51 to 100 hours £18 per month

101+ hours £26 per month

Each month should be calculated separately so if you take a holiday one month, you may need to claim a lower amount that month.

Conclusion

Make sure that you’re making a claim for your home working as it will reduce your tax bill. Contact us if you’d like any help with your self assessment tax return.

2024 Autumn Budget Update

Mon, 04 Nov 2024 09:30:00 GMT

The 2024 Autumn Budget brings some significant tax changes for individuals and businesses. Here’s a breakdown of some of the announcements.

Income Tax, Personal Allowances and Employee National Insurance

The Chancellor has opted to freeze income tax thresholds again, extending the freeze on personal allowances and higher-rate tax thresholds until 2028. This move means that, as inflation pushes wages up, more people may find themselves in higher tax brackets over time. There is no change to employee national insurance rates.

National Minimum Wage (NMW)

From April 2025, NMW will be increasing to £12.21 per hour for eligible employees, with the rates for 18-20 year olds increasing to £10.00 per hour and under 18s and apprentices to £7.55 per hour.

Employers must make sure they are meeting these minimum rates.

Employer National Insurance Contributions

From April 2025, the main rate of employer national insurance (NI) will increase from 13.8% to 15% and the threshold at which contributions begin will reduce from £9,100 to £5,000 per year. For an employee earning more than £9,100, this is an increase in NI of at least £615 per year.

The impact of this on small businesses has been reduced with an increase in the employment allowance from £5,000 to £10,500 per year. The employment allowance is a reduction in employer NI contributions. The employment allowance is currently only available to employers with less than £100,000 of employer NI contributions in the previous tax year but this restriction will be removed from April 2025.

However, those companies with only one employee paid above the NI threshold where that employee is a director are not eligible for the employment allowance so this will affect many small consultancy businesses.

Corporation Tax

The government has published a Corporate Tax Roadmap that includes a commitment to cap the corporation tax main rate at 25%, maintain the small profits rate and marginal relief, maintain full expensing and annual investment allowance for capital purchases, and R&D relief rates.

The Roadmap also shows that there is an intention to simplify tax administration for companies.

Capital Gains Tax (CGT)

Changes to CGT were a major talking point prior to this year’s budget with the rates increasing from 30 October 2024 to 18% (previously 10%) in the basic rate band and 24% (previously 20%) in the higher/additional rate bands. This aligns the rates for other assets with the rates already in place for disposals of residential property.

Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026. The lifetime limit for IR has reduced to £1m which is in line with BADR.

Stamp Duty Land Tax (SDLT)

The higher rate charged on purchases of additional dwellings has increased to 5% (previously 3%) from 31 October 2024. For companies purchasing dwellings costing more than £500,000, the rate has also increased from 15% to 17%.

The SDLT thresholds were already due to reduce from 1 April 2025 because the current thresholds were a temporary measure from September 2022 to 31 March 2025.

Inheritance Tax (IHT)

There are changes to agricultural property relief and business property relief from 6 April 2026 whereby 100% relief is only available for the first £1m of assets, reducing to 50% thereafter.

Unused pension funds will be brought into the value of estates from 6 April 2027.

The nil rate band will remain at £325,000 and residence nil rate band at £125,000 until April 2030.

Non-UK Domiciled Individuals

As previously announced, the remittance basis of taxation (where non-UK domiciled individuals could elect to pay tax only on their UK sourced income/gains and any remittances made to the UK) will be removed from 6 April 2025.

Other Points

Making Tax Digital (MTD) for Income Tax will be extended to the self-employed and landlords with turnover of more than £20,000, although no date has been given for this. You can read more about MTD in our previous blog .

ISA subscription limits are frozen until 2030.

The interest rate for unpaid tax will increase to 9% (currently 7.5%) from April 2025.

There will be a focus on non-compliance with additional compliance staff being recruited at HMRC and a clear message about reducing the tax gap. We will likely see an increase in ‘one to many’ letters which HMRC send to individuals to prompt them to consider whether their tax affairs are up to date.

Conclusion

With a host of tax changes impacting both individuals and businesses, planning ahead is crucial. Whether you’re affected by the income tax freezes, NI rises or CGT increases, taking steps now can help you make the most of available reliefs and avoid potential pitfalls.

If you’d like tailored advice on navigating the Autumn Budget 2024, don’t hesitate to reach out. We’re here to help you make the most of the new regulations, ensuring you’re well-prepared for the financial year ahead.

Self-Employed vs Limited Company: Which Structure is Best for You?

183:722748240 (Chrissy Leach) — Mon, 28 Oct 2024 09:30:00 GMT

In the UK, the most common business structures for small businesses are self-employment (as a sole trader) or operating through a limited company. Each option has its own tax, legal, and financial implications, and the right choice depends on your individual circumstances.

Legal Structure

Self-Employed (Sole Trader)

 As a sole trader, you are the business; there is no legal distinction between you and your business. You are personally responsible for any debts, meaning that your personal assets are at risk if the business fails.

Limited Company

A limited company is a separate legal entity from its owner(s). This offers limited liability protection, meaning that in the event of financial trouble, your personal assets are safeguarded, and you are only liable for the amount you invest in the company. The company itself is responsible for its own debts and obligations.

This also means that you cannot use the company as your personal bank account as it’s legally separate and so withdrawing money has tax consequences.

Taxation

One of the most important differences between being self-employed and running a limited company is how you are taxed.

Self-Employed Tax

 As a sole trader, you pay income tax and national insurance through Self Assessment on your business profits. You are also required to pay Class 4 National Insurance Contributions (NICs). The tax rates are currently 0% for your personal allowance, 20% in the basic rate band, 40% in the higher rate band and 45% in the additional rate band. National insurance is 0% on the initial profits, 6% on the next section and 2% on the higher amount.

Limited Company Tax

 A limited company is subject to corporation tax on its profits. The current rate for corporation tax in the UK is 25% for profits over £250,000, and a marginal rate for profits between £50,000 and £250,000. For profits below £50,000, the rate is 19%. These thresholds may be reduced if you have shares in other companies. 

You’ll be a director and shareholder of your limited company and can take income through a combination of salary and dividends. The salary is taxed on you at the income tax rates above and employee/employer national insurance will also be due, but there is corporation tax relief in the company. Dividends are taxed at lower tax rates but are taken from the net profits of the company so there is no tax relief.

The fact that you can choose how/when to extract profits from your limited company is often the main reason people opt for running their business via a limited company.

Expenses and Tax Deductions

Self-Employed

Sole traders can deduct allowable business expenses from their profits before calculating tax. These expenses must be "wholly and exclusively" for business purposes. See our previous blog post here for some examples.

Limited Companies

Limited companies can also deduct business expenses from their profits before calculating tax. The company can contribute to the director’s pension without triggering a personal tax liability (subject to the annual allowance) and also provide some small gifts and annual parties for employees (including the director). See our previous blog post here about trivial benefits.

If any personal costs are covered by the company then there will be national insurance due for the company and personal tax due for the director so this should be discussed with your accountant.

VAT

Whether you're self-employed or a limited company, you will still need to adhere to the same VAT rules and register for VAT if you meet the threshold.

Hiring Employees

You can hire employees whether you're self-employed or a limited company. You'll need to set up a payroll scheme and follow the payroll processing procedures, as well as adhering to employment laws.

Administrative Responsibilities

Self-Employed

The administrative burden for sole traders is relatively light. Sole traders must:

Register with HMRC for Self Assessment.
Submit an annual Self Assessment tax return.
Maintain basic accounting records to show income and expenses.

Making Tax Digital is coming which means that you may have to send quarterly submissions to HMRC, see our blog here about this.

Limited Companies

Running a limited company comes with more administrative responsibilities, including:

Registering the company with Companies House.
Filing annual accounts and a confirmation statement with Companies House.
Submitting a Corporation Tax return to HMRC.
Maintaining more detailed accounting records, as your accounts must follow certain legal requirements.

It is advisable to have an accountant whether you are self-employed or running a limited company but particularly with a limited company as you must adhere to company legislation and your accounts must be prepared under certain standards.

Perception and Credibility

For some businesses, operating as a limited company can enhance credibility and trust with potential customers and suppliers. The "Limited" after a company name suggests that the business is more established and professionally managed. In certain industries, clients may prefer to work with a limited company due to the protection and formality it offers.

Sole traders may find that certain larger companies or suppliers are reluctant to enter into contracts with them due to the lack of limited liability.

Flexibility and Growth Potential

Self-Employed

Operating as a sole trader is simple and flexible, which can be advantageous for small businesses or freelancers with modest earnings. However, as your business grows, the lack of limited liability and tax advantages may become restrictive.

Limited Companies

If you plan to grow your business, hire employees, or seek external investment, a limited company is often the better structure. It provides scalability, greater flexibility in terms of ownership, and can make it easier to raise capital. However, it also brings greater complexity.

Conclusion: Which Is Right for You?

Choosing between self-employment and setting up a limited company depends on a number of factors, including your business size, growth aspirations, and personal circumstances. Generally:

Self-Employed status is simpler, requires less admin, and is often suitable for small, low-risk businesses or freelancers.
Limited Company status offers more tax planning opportunities, reduced personal financial risk, and is ideal for businesses aiming to grow and scale.

You can always begin running your business as a sole trader and move to a limited company later on as you grow.

Before making a decision, it's advisable to consult with an accountant to assess your individual situation and ensure you're making the most tax-efficient choice for your business. CJL Accountancy can help with looking at your personal circumstances so that you can make an informed decision.

What Expenses Can I Claim as a Landlord or Property Company Owner?

Mon, 21 Oct 2024 08:30:00 GMT

As a landlord or property company owner in the UK, understanding what expenses you can claim is essential for ensuring you pay the correct amount of tax.

General Principles for Claiming Expenses

In our previous blog we gave some examples of general expenses that can be claimed. You can read that here .

Essentially, the costs need to be for the purposes of generating income for your property business.

Property Business Specifics

Professional Services

The costs of professional services directly related to the management of your rental properties are deductible. This can include fees for legal, accounting, and management services. Examples of allowable professional fees:

Letting agent fees for managing the property.
Legal fees incurred for drafting tenancy agreements or handling evictions.
Accountancy fees for preparing profit calculations or offering financial advice.

Legal fees for acquiring or selling properties are not deductible as running costs but will likely qualify as capital costs to reduce capital gains tax when selling.

Repairs and Maintenance

The cost of work that keeps your property in good condition is allowable but not improvements as these will be capital and may be allowable costs to reduce capital gains tax when selling.

Examples of allowable repairs and maintenance expenses:

General repairs to fix wear and tear, such as replacing a broken window or mending a roof.
Painting and decorating to maintain the property in a habitable state.
Servicing of appliances like boilers or electrical fittings.

Running Costs

As a landlord, you will incur various running costs associated with letting out your property. These expenses are typically allowable as long as they are directly related to the day-to-day operation of your rental business. Examples include:

Utility bills: If you, as the landlord, pay for electricity, water, or gas on behalf of tenants.
Insurance: Including landlord’s insurance, which covers buildings, contents, and public liability.
Council tax and other local authority charges (if paid by the landlord).

For property companies that manage multiple units, running costs might also include administrative expenses like software subscriptions or office supplies.

Travel Expenses

If you need to travel to your rental property for inspections, maintenance, or meetings with tenants or agents, you can claim travel expenses. Allowable travel expenses include:

Mileage if using your personal vehicle for property-related visits.
Public transport costs such as train or bus fares.

You should keep detailed records of your trips, including receipts and the purpose of the visit, as HMRC may request evidence of your travel.

Advertising and Marketing

Finding new tenants often requires advertising and marketing efforts, and these costs are also deductible. Whether you’re paying for:

Listings on property websites
Leaflets or other promotional materials
Paid social media ads

Replacement of Domestic Items Relief

The Replacement of Domestic Items Relief allows you to deduct the cost of replacing furnishings, appliances, and other household goods. It is not available for the initial purchase of these items. This relief is only available for items provided for the tenant’s use, such as:

Furniture (e.g. sofas, beds, and wardrobes)
Appliances (e.g. washing machines, fridges, and dishwashers)
Kitchenware (e.g. crockery, cutlery, and utensils)

Finance Costs (Mortgage Interest)

Individuals with mortgaged rental properties cannot deduct the full mortgage interest as an expense against their rental income. Instead, a maximum of 20% can be claimed as a tax relief. Property companies can still deduct mortgage interest as an allowable expense so full tax relief is available.

Capital vs. Revenue Expenses

It’s essential to distinguish between capital expenses and revenue expenses. Capital expenses are costs related to acquiring, improving, or selling a property (e.g. extensions or adding new rooms), and these are not deductible from your rental income. Instead, they may be claimed against Capital Gains Tax (CGT) when you sell the property.

Revenue expenses, on the other hand, are related to the day-to-day running of your rental business, and these are allowable for deduction from your rental income.

Conclusion

It’s important to keep records of the costs, including photos of the work done where the may be a question of whether a cost is revenue or capital.

CJL Accountancy are a specialist accountant for landlords, who can help navigate the complex tax rules and keep your accounting records clear and up to date.

What Expenses Can I Claim as an Influencer or Content Creator?

Mon, 14 Oct 2024 08:30:00 GMT

As an influencer or content creator in the UK, understanding what expenses you can claim is essential for ensuring you pay the correct amount of tax. The lines between personal and business expenses can sometimes be blurred so it’s essential to keep detailed records.

General Principles for Claiming Expenses

In our previous blog we gave some examples of general expenses that can be claimed. You can read that here . Essentially, the costs need to be for the purposes of generating income for your business.

Influencer and Content Creator Specifics

Home Office/Studio Costs

If you use your home to create content, it’s likely to be more tax efficient to claim a proportion of your household costs rather than the simplified allowance (currently £6 per week). However, you do need to keep detailed records of the costs and your usage so speak to your accountant about this.

Equipment and Technology

As a content creator, you’ll likely need various types of equipment to produce high-quality work. The cost of purchasing and maintaining this equipment is generally an allowable expense. This can include:

Cameras, lighting, and microphones.
Laptops, computers, and tablets.
Software subscriptions, such as Adobe Creative Cloud or video editing tools.
Mobile phones (if used for business purposes).

For larger items such as cameras or computers, these are often claimed as capital allowances. It’s in a different place in your tax return but you will usually be able to claim the whole cost in full in the year of purchase.

Travel and Accommodation Costs

If you travel for business purposes — to attend events, work with brands, or create content on location — your travel and accommodation expenses can usually be claimed. If there is a personal element to any trips then be careful to apportion in a reasonable way. Make sure you keep all receipts but also details of the purpose of the trip in case HMRC check your tax return.

Clothing and Beauty Products

One of the grey areas for influencers is clothing and beauty products. HMRC’s general rule is that you cannot claim for clothing that could be worn in your personal life. However, if you require specific items of clothing for your content creation — for example, costumes, branded clothing, or items that are unlikely to be used outside of your work — these may be allowable.

Similarly, beauty products that you buy for review purposes or for creating content may be able to be claimed as an expense, as long as they are used for the business and not for personal use.

Make sure you keep all receipts but also details of the use of the products in case HMRC check your tax return.

Marketing and Advertising

You’ll likely have costs associated with maintaining your online presence, such as SEO services, content creation planning/managing. These are allowable for tax purposes.

If you send out gifts or promotional items as part of your business strategy — perhaps to followers or brands you work with — these costs may be deductible. However, HMRC has strict rules about what qualifies as a business gift:

The gift must cost less than £50
It cannot be food, drink, tobacco, or vouchers exchangeable for goods/cash
The gift must contain an obvious advert for your business

An example of an allowable gift would be a branded reusable flask.

Subscriptions, Memberships and Training

You can claim for memberships and subscriptions to industry-related associations. HMRC recently broadened their allowable training to include developing or learning new skills that help support your business, for example, administrative skills. Other training to keep up to date with the influencer industry will be allowable.

Conclusion

It’s important to keep records of the costs and also the purposes of the costs in case there is a question of some personal element to the cost.

CJL Accountancy are a specialist influencer accountant who can help navigate the complex tax rules and keep your accounting records clear and up to date. We can take the stress away from you so you can continue to grow as a successful content creator.

Trivial Benefits

Tue, 08 Oct 2024 08:30:00 GMT

If you have a limited company, you can use trivial benefits as a way to reduce your tax liability and incentivise your employees.

What Are Trivial Benefits?

A trivial benefit is a small gift or token of appreciation provided by an employer to an employee. This can include you as director of your limited company. The gift is allowable as a deduction for corporation tax purposes and there is no tax or national insurance charged on the employee.

According to HMRC, for a benefit to be considered "trivial" and tax-free, it must meet the following criteria:

it costs £50 or less (including VAT) per individual
it isn’t cash or a cash voucher
it isn’t a reward for their work (such as meeting a sales target)
there’s no contractual entitlement to it

For directors of a “close company” (a company controlled by five or fewer shareholders), trivial benefits are capped at £300 per tax year. However, for regular employees, there is no annual limit on the number of trivial benefits that can be provided, as long as each individual benefit is within the £50 threshold.

Examples of Trivial Benefits

Common examples of trivial benefits are:

drinks for the office
alcohol/chocolates/biscuits
flowers
gift cards that are not exchangeable for cash
taking employees out for a meal to celebrate a birthday

Pitfalls to Avoid

While trivial benefits provide an excellent opportunity for tax savings, it’s important to ensure that all qualifying conditions are met. Common pitfalls include:

exceeding the limit - even if the benefit is over £50 by a penny, it cannot be classed as trivial, the whole benefit becomes subject to tax and national insurance for the employee
cash or cash-equivalent - if the voucher is exchangeable for cash, even if it’s a small amount, it will always be taxable
performance-related - the benefits must not be linked to performance or be contractual

Other Non-Taxable Benefits

There are other benefits that you can provide to employees (or yourself as director) that are tax-free:

annual staff parties up to £150 per person per tax year - such as a summer barbecue and Christmas party
a mobile phone - must be paid for by the company rather than reimbursed
contributing to a pension scheme
car parking at the office

Conclusion

Trivial benefits are an excellent way for companies to incentivise employees while making small but impactful savings on corporation tax. By offering thoughtful, non-cash gifts to staff throughout the year, businesses can strengthen workplace culture and morale, all without adding to the tax burden of either party.

It’s essential to keep detailed records of trivial benefits to ensure compliance with HMRC regulations and to maintain the correct tax position.

If you’re looking for some further guidance on this then get in contact.

What Expenses Can I Claim?

Tue, 01 Oct 2024 08:30:00 GMT

As a self-employed individual or the owner of a small business in the UK, knowing which expenses you can claim is key to reducing your tax bill and keeping your business financially efficient

Claiming allowable business expenses will reduce your taxable profit, meaning you will only pay tax on the money that remains after deducting those costs. To stay compliant with HMRC, it is essential to know what can and cannot be claimed.

What Are Allowable Expenses?

In the simplest terms, allowable expenses are costs incurred "wholly and exclusively" for business purposes. They are the costs that are incurred to generate income for your business.

Common Allowable Expenses

Here’s a breakdown of the most common expenses that you, as a self-employed individual or small business owner, may be able to claim.

Office Costs

Rent and Utility Bills - if you rent an office or workspace, you can claim for rent, business rates, and utilities such as electricity, heating, and water.
Home Office - many self-employed individuals work from home. You can either claim a proportion of your household bills or a simplified flat rate that HMRC allow (£6 per week at the time of writing).
Office Supplies - this includes items such as stationery, postage, printer paper, and any small equipment used in the daily running of your business.

Clothing Costs

You can claim for uniforms or safety/protective clothing but not for normal clothes, even if you wear them to work.

Travel Costs

You can claim for business-related travel, but not your daily commute to a regular place of work. Allowable travel expenses include:

Vehicle Costs - if you use a car/van for business purposes, you can claim for fuel, insurance, servicing, and repairs. There are two ways to claim:

- Actual costs - claim for the costs you pay.

 - Simplified mileage rates - HMRC allows you to claim 45p per mile for the first 10,000 business miles driven in a year, then 25p for additional miles.

You'll need to keep detailed records of the costs and the business miles.

Public Transport - train, bus, taxi, or plane fares can be claimed if they are for business purposes.
Accommodation - if you travel for work and need to stay overnight, you can claim for reasonable hotel or accommodation costs, as well as meals incurred while away from home on business.

Professional and Financial Costs

Accountancy and Legal Fees - fees paid to accountants, solicitors, and other professional advisers can be claimed if they are related to your business.
Bank charges - you can claim bank fees, such as charges on a business account or interest on loans used for business purposes.

Marketing and Advertising

Marketing and advertising are critical for growing your business, and expenses in this area are allowable. These include:

Advertising in newspapers, online, or on social media.
Website costs, including domain registration, hosting, and development.
Costs for printing business cards, brochures, and promotional materials.
Costs of supplying products to influencers in return for advertising. Note that this is also likely to be considered a sale of the product to the influencer.

Subscriptions and Training

Subscriptions - you can claim for membership fees to trade bodies or professional organisations relevant to your industry, as well as subscriptions to professional magazines or journals.
Training Courses - training that is directly related to your business or the work you do is allowable.

Staff Costs

If you employ staff, you can claim the following as allowable expenses:

Salaries - wages and salaries paid to employees, including bonuses, overtime, and statutory payments such as sick pay and maternity pay.
Employer’s Pension Contributions
Employer’s National Insurance Contributions
Training Costs for Employees - training that is necessary to improve the skills and performance of your employees.

You will likely need to run a payroll scheme if you employ staff.

Stock and Materials

For businesses that sell products, the cost of stock, raw materials, and goods purchased for resale are allowable expenses.

Business Insurance

Business insurance premiums are allowable if they cover:

Professional indemnity insurance.
Public liability insurance.
Employer’s liability insurance.
Contents or vehicle insurance specifically for business assets.

Capital Allowances

While capital expenses, such as purchasing equipment or machinery, are not considered day-to-day business costs, you can claim capital allowances on these expenses. They are available on the cost of machinery, office equipment (e.g. computers and printers), and even some vehicles. The Annual Investment Allowance (AIA) allows most businesses to deduct the full cost of qualifying assets up to a limit each year.

Expenses You Cannot Claim

Not all expenses are allowable, and some costs cannot be deducted for tax purposes. Common examples of non-allowable expenses include:

Personal Expenses - any costs incurred for personal or family use are not deductible, even if some business-related activities take place during the same period. This includes clothing (unless it's protective clothing or a uniform) and your daily commute. If you have a limited company there are other tax consequences of the company paying for personal expenses so it’s best to keep these separate.
Fines and Penalties - HMRC does not allow claims for fines or penalties, such as speeding tickets, even if they were incurred while carrying out business activities.
Entertaining Clients - while you may incur costs for entertaining clients or business contacts, HMRC does not allow these for tax purposes.

Staying Compliant with HMRC

To stay on the right side of HMRC, make sure that all expenses are legitimate business costs and keep detailed records and receipts to support your claims, as HMRC may request evidence during a tax review.

We can help you with advice on the costs to claim to stay as tax efficient as possible and keeping your records.

Removal Of Furnished Holiday Letting Rules

183:722748240 (Chrissy Leach) — Tue, 24 Sep 2024 08:30:00 GMT

There are big tax changes coming for owners of holiday lets as the Furnished Holiday Lettings (FHL) regime will be removed

From April 2025, holiday lettings will be treated as normal residential properties and taxed like them which means the tax benefits will be lost.

Mortgage Interest Relief

Mortgage interest is an allowable expense when calculating rental profits for an FHL but this will be removed from April 2025. If your holiday let has a mortgage and you’re a higher/additional rate taxpayer then you’re likely to pay more tax.

Expenses

Capital allowances can be claimed for FHL’s which is tax relief for fixtures and fittings but this is not available for usual residential properties.

Capital Gains

The sale of an FHL property would potentially qualify for Business Asset Disposal Relief which means capital gains tax (CGT) could be as low as 10%. From April 2025 the usual CGT rates for residential property will apply. At the time of writing that’s 18% at the basic rate and 24% at the higher rate. There is speculation that these rates may be increased at the Autumn Budget.

Pension Contributions

Pension contributions can be made up to your relevant UK earnings (or £3,600 if earnings are lower). FHL profits count as relevant UK earnings so this means you are able to save more into your pension and get tax relief but this will be lost from April 2025.

If you’re looking for advice on how this affects you then contact us.

Important Tax Dates

Tue, 17 Sep 2024 08:30:00 GMT

Some important dates to be aware of

Registering For Self-Assessment

If you started your business between 6 April 2023 and 5 April 2024 then you’ll need to register for self-assessment by 5 October 2024.

Filing Your Tax Return

If you need to file a tax return for the 2023/24 tax year then the deadline is 31 January 2025. Penalties will be charged for late filing.

Tax Payments

If you have tax payable for the 2023/24 tax year then the due date is 31 January 2025. If you owe over £1,000 then you may need to make payments on account for the 2024/25 tax year on 31 January and 31 July 2025.

Interest and penalties will be charged for late payment.

Getting Organised

If you need an accountant to help with your 2023/24 tax return then don’t delay.

Selling a UK Residential Property

You may need to file a Capital Gains Tax (CGT) return and pay the tax by 60 days after completion. If you need an accountant to help with your CGT return then speak to them before completion or very soon after to avoid missing the deadline. Penalties will be charged for late filing. Interest and penalties will be charged for late payment.

Landlord’s Guide to Tax

Sun, 08 Sep 2024 18:47:05 GMT

An overview of what you need to know about tax as a UK property owner

The tax landscape for landlords is complex and understanding your tax obligations is crucial for staying compliant and optimising your financial position. This guide will walk you through the key tax considerations for landlords in the UK.

Income Tax on Rental Income

As a landlord, you are required to pay income tax on the profit you make from renting out your property. Your rental income must be declared on a self-assessment tax return for the tax year (6 April to the next 5 April) and this needs to be filed by the next 31 January. The profit is calculated as your total rental income minus allowable expenses. Any tax liability must be paid by the tax return filing deadline and you may also need to pay payments on account for the next tax year on 31 January and 31 July.

Allowable Expenses

Allowable expenses are costs that you can deduct from your rental income to reduce your tax bill. These include:

Letting agent fees and management fees
Property repairs and maintenance (but not improvements)
Ground rent and service charges
Council tax, insurance, and utility bills (if paid by the landlord)
Accountancy fees for preparing rental accounts

If costs are below £1,000 then the property allowance can be claimed in place of actual expenses.

Mortgage Payments

Only the interest element of mortgage payments can be claimed, not the capital repayment. If you have an interest only mortgage then this will be the whole payment.

The mortgage interest is not allowable as a deduction from your rental income but a basic rate tax relief can be claimed. This means the tax relief is restricted for higher or additional rate taxpayers.

Capital Gains Tax (CGT) on Property Sales

If you decide to sell a rental property, you may be liable to pay CGT on the profit (gain) you make from the sale. CGT is payable on the difference between the sale price and the original purchase price, minus allowable costs such as:

Solicitor and estate agent fees
Costs of improvement works (but not routine repairs)
Stamp Duty Land Tax (SDLT) paid on purchase

The CGT rates for residential property at the time of writing are:

18% for gain in the basic tax rate
24% for gain in the higher or additional tax rates

Every individual has an annual CGT allowance (£3,000 for 2024/25), which can be deducted from your total gains before calculating the tax.

If the property was at any time your main residence, you may be eligible for Private Residence Relief (PRR), which can reduce the taxable gain.

A CGT return may need to be filed within 60 days of completion when a UK residential property is sold, and any CGT paid by the same date. Penalties will be charged for late filing and payment.

Making Tax Digital (MTD)

The UK government’s Making Tax Digital (MTD) initiative will require some taxpayers, including landlords, to maintain digital records and submit tax returns electronically. Landlords with gross income above £50,000 must comply with MTD for Income Tax from April 2026, and those with gross income above £30,000 from April 2027. See our previous post for more about this.

Properties Held In Companies

You may wish to build your property portfolio in a limited company which can be especially useful if you are a higher/additional rate taxpayer and do not need to access the profits immediately.

You should be aware of the following:

If you already own the property(s) then there can be tax payable on transfer into a limited company.
If any property is valued over the Annual Tax on Enveloped Dwellings (ATED) threshold then you’ll need to file an ATED return each year and may have additional tax to pay. The threshold is £500k at the time of writing.
The mortgage interest restriction is not relevant for properties held in companies.
The company will pay corporation tax on profits.

Conclusion

Navigating the UK’s property tax landscape as a landlord can be challenging, but understanding the key tax rules and planning ahead can make a significant difference. Whether it’s optimising allowable expenses, planning for CGT, or preparing for MTD, staying informed and seeking professional advice is essential for minimising your tax burden and maximising your rental income.

Making Tax Digital

Sat, 24 Aug 2024 14:26:35 GMT

Don't get caught out by this change

If your business is VAT registered then you will already be signed up for Making Tax Digital for Business.

From April 2026, landlords and sole traders, including influencers and content creators, with more than £50,000 of gross income (before deducting any costs) will need to comply with Making Tax Digital for Income Tax. The threshold is reduced to £30,000 from April 2027.

What is Making Tax Digital?

Making Tax Digital is HMRC digitising the tax system with the intention of making it easier for individuals and business to get their tax right. By keeping records digitally, it is thought that record keeping will be more timely and accurate. At the moment there are no plans to collect taxes any sooner than the payment dates in place.

What do I need to do?

1. Keep digital records – your accounting records must be kept digitally either using accounting software or spreadsheets.

2. Send quarterly updates to HMRC – there must be no break in the link between your digital records and the update sent to HMRC.

Benefits

By recording accounting transactions digitally and closer to the date of the transaction you can have a more up to date and accurate picture of your business’ finances and profit. If you’re using a cloud based software package, you can give your accountant access so that they can review your recording, check your VAT returns, prepare your accounts or help with any questions you have. Most software packages also have a bank feed so the transactions can be posted directly from your bank account with little input from you which will save you time.

How we can help

We can digitise your records to comply with Making Tax Digital but also so that you have a real-time understanding of your profits.

Influencers and Content Creators Guide to Tax

183:722748240 (Chrissy Leach) — Sat, 24 Aug 2024 13:53:37 GMT

An overview of what you need to know about tax as a UK-based influencer

As the digital landscape continues to evolve, so has the rise of social media influencers and content creators. Whether you’re sharing fashion tips on Instagram, reviewing tech gadgets on YouTube, or promoting fitness routines on TikTok, the influencer industry offers lucrative opportunities. However, with these opportunities come responsibilities; particularly when it comes to tax.

Understanding your tax obligations as an influencer is crucial to avoiding pitfalls and ensuring that you comply with HMRC regulations. This guide provides an overview of what you need to know about tax as a UK-based influencer.

Do You Need to Pay Tax?

If you're earning money from your social media activities, you need to declare your income to HMRC. This is true whether your earnings are from sponsored posts, affiliate marketing, product placements, or other sources. Essentially, if you're receiving any kind of payment or benefit in exchange for your online content, you may be liable to pay tax.

For most, this will involve registering as self-employed and completing a self-assessment tax return each year.

What Counts as Income?

Income for influencers and content creators can take many forms:

Monetary Payments: Cash received for services such as sponsored posts, shoutouts, or brand partnerships.
Gifts and Free Products: If a company sends you free products or experiences in exchange for a review or mention, the value of these items counts as income. According to HMRC, the value should be based on the market value of the item, not the price you would pay if you had purchased it at a discount.
Affiliate Marketing Earnings: Commissions earned from affiliate links should also be declared as income.
Ad Revenue: Earnings from platforms like AdSense or TikTok’s Creator Fund are taxable.

Allowable Expenses: What Can You Deduct?

The good news is that you can offset some of your earnings by claiming allowable expenses, which reduce your taxable income. Allowable expenses are costs incurred “wholly and exclusively” in the course of your business. Common examples for influencers and content creators include:

Equipment: Cameras, computers, software, and other equipment used for creating content.
Marketing and Advertising: Costs for promoting your social media channels.
Professional Services: Fees paid to accountants, legal advisors, or agents.
Home Office Costs: If you use a portion of your home for work, you can claim a proportion of your rent, utilities, and internet costs.
Travel Costs: If you travel for content creation, you can claim the cost of travel, accommodation, and subsistence. Although be aware that any personal element cannot be claimed.

Keep records and receipts for all your expenses, including details of what the cost was for, as HMRC may request evidence during a compliance check.

VAT Considerations

If your turnover exceeds £90,000 in a 12-month period, you’ll need to register for VAT. This threshold applies to your total business income, so it’s important to keep track of all earnings. Once registered, you’ll need to charge VAT on your services and submit regular VAT returns.

For influencers and content creators dealing with international clients, the VAT rules can become complex, particularly if you’re working with businesses based outside the UK or within the EU.

Dealing with HMRC: Self-Assessment and Deadlines

As an influencer or content creator, you’ll typically be required to complete a self-assessment tax return, which includes:

Income from Self-Employment: This is where you’ll report your earnings as an influencer or content creator.
Employment Income: If you also have a regular job, include your salary details here.
Other Income: Report any additional income, such as investments or rental income.

Key deadlines include:

5 October: Register for self-assessment if you’ve started earning as an influencer in the previous tax year.
31 January: Submit your online self-assessment tax return and pay any tax owed for the previous tax year.
31 July: Pay a payment on account if applicable.

Late submissions or payments can lead to penalties and interest, so it’s vital to keep on top of these deadlines.

Seek Professional Advice

As a relatively new industry, it’s likely that HMRC will start to open checks into the tax affairs of influencers and content creators. It’s vital that good records are kept as this helps with any checks.

Consulting with an accountant who understands the nuances of the digital economy can save you time and help you avoid costly mistakes.

Conclusion

The life of an influencer can be exciting and financially rewarding, but it also comes with responsibilities—particularly when it comes to tax. By understanding your obligations, keeping accurate records, and seeking professional advice when needed, you can ensure that your tax affairs are in order, allowing you to focus on what you do best: creating content that engages and inspires your audience.

Remember, failing to properly manage your tax obligations can lead to fines, penalties, and in extreme cases, prosecution. So, stay informed, stay compliant, and don’t let tax worries stand in the way of your success.