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.

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!

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 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!

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 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.

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.

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!

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 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. 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!