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Taking advantage of green tax reliefs is a good way to reduce how much Climate Change Levy tax (CCL) your business pays.

To get these reliefs, your business will need to operate in a more environmentally friendly way.

Any business in the industrial, public services, commercial and agricultural sectors is subject to the CCL Tax.

It is charged on ‘taxable communities’ for heating, lighting and power purposes. It is not charged on road fuel and other oils that are already subject to excise duty.

You may get relief from some taxes, for example, if:

• You use a lot of energy because of the nature of your business
• You are a small business that does not use much energy
• You buy energy-efficient technology for your business

Meanwhile, meeting the following requirements may exempt you from paying the CCL:

• Your business uses small amounts of energy – less than 33kWh electricity and/or 145kWh gas a day
• You are a domestic energy user – energy is used in homes, schools, caravans and self-catering accommodation
• You are a charity involved with non-commercial activities

How can my business reduce the CCL it is eligible to pay?

For eligible companies that do pay the CCL, it is possible to pay a reduced main rate if you enter a Climate Change Agreement (CCA) with the Environment Agency.

Paying a reduced rate means you will be required to improve your business’s energy efficiency and lower your average energy consumption.

Those businesses bound by a CCA will receive a reduction of 90 per cent in the CCL rate paid on electricity bills and a 65 per cent reduction on all other fuels.

You will also have to measure and report your business’s energy use and carbon dioxide emissions against targets set over two-year terms.

If you meet the targets set at the end of each term, you will continue to receive a CCL discount.

To find out how to make the most of green tax reliefs, get in touch with one of our advisers.

As a sole trader, it is only natural to look for opportunities to save money and maximise your earnings.

One effective strategy is to consider buying a van, as sole traders can benefit from tax deductions on business-related expenses through Government reliefs like Capital Allowances.

Why are Capital Allowances beneficial?

Capital Allowances are the tax deductions you can claim for the cost of purchasing assets, like a van, for your business.

The allowance you should utilise when buying your van is the Annual Investment Allowance (AIA).

Under the AIA, you can deduct 100 per cent of the cost of a van from your taxable income in the year you purchase it, up to the £1 million limit.

How do I claim the full cost of my van?

To claim a tax deduction on your business van, the rules depend on whether you are self-employed or operating through a limited company:

• Self-employed – You can claim capital allowances and running costs, but if the van is used for both business and personal purposes, you must apportion the costs accordingly. Only the business-use portion can be deducted.
• Limited company – The company can claim 100 per cent of the cost through capital allowances and deduct running expenses in full. However, if the van is used for personal journeys, this may trigger a van benefit-in-kind (BIK) charge for the employee. Only zero-emission vans are exempt from this charge.

To ensure your claim is accepted, maintain detailed records of your business van expenses, including the purchase price, maintenance costs, and mileage.

Claiming ongoing expenses of van ownership

You can claim a number of allowable business expenses as part of van ownership, including:

• vehicle insurance
• repairs and servicing
• fuel
• parking
• breakdown cover

However, this can only be claimed against business journeys and cannot be claimed against:

• Non-business driving
• Fines for driving or parking

In some instances, it may be easier to calculate your van expenses using simplified expenses, which offer a flat rate for mileage instead of the actual costs of buying and running your vehicle.

Owning a van as a sole trader means balancing its business benefits with proper financial planning.

To avoid discrepancies in your reports to HMRC, it is essential to maintain accurate mileage records and details of the personal use of the vehicle.

To maximise your financial benefits, get in touch with our team.

A director’s loan is money taken out of a company by a director that is not a salary, dividend, expense reimbursement or money that has previously been paid into or loaned to the company.

A record of money borrowed or paid into the company must be kept – usually known as a director’s loan account – and this money must be repaid to the company or properly accounted for within a set timeframe.

Misusing directors’ loans can lead to financial penalties, breach of fiduciary duties, legal issues, and unwanted scrutiny from HM Revenue & Customs (HMRC).

If you have used a director’s loan, here is what you need to watch out for:

• Section 455 tax charges – If loans are not repaid within nine months of the financial year-end, your company faces a tax charge of 33.75 per cent on the outstanding balance.
• Personal tax implications – Unrepaid or forgiven loans may be treated as personal income, resulting in additional Income Tax and National Insurance (NI) liabilities.
• Benefit in Kind (BIK) – Loans exceeding £10,000 or offered at below-market interest rates may trigger taxation linked to Benefit in Kind (BIK). Therefore, the company must submit the P11D to HMRC and give a copy to the director.
• Administrative penalties – Failing to record or report loans accurately in your accounts or tax returns could result in fines and further investigation.

In addition to fines, consistently overdrawn accounts or mismanagement can tarnish your company’s financial credibility, especially if it draws additional HMRC scrutiny.

Remember, acting against the interests of your company may also constitute a breach of your fiduciary duties as a director.

If this is the case, the company is entitled to seek equitable compensation from any director whose breach of these duties results in a loss.

How to stay compliant

To stay compliant, you must maintain clear records and follow the rules associated with directors’ loans.

If you are unsure how to handle directors’ loans effectively, it is best to seek professional advice.

Need help managing your directors’ loans? Get in touch with our expert advisers.

Nearly 900,000 companies were incorporated in 2024 – an 11.2 per cent increase compared to 2023. More entrepreneurs are recognising the benefits of limited companies.

The advantages of limited companies include limited personal liability, mitigated taxation and greater exposure to investment opportunities.

To help you start your journey towards limited company status, here are our top tips:

Research

Taking the first steps towards incorporation should not be taken lightly. Whilst it limits liability if things go wrong, it does come with some strict compliance requirements in regard to regular reporting to Companies House, which you need to prepare for.

Paying yourself

As a director, you can pay yourself via salary, dividends, or both to maximise your take-home pay.

The most efficient approach is often to pay yourself a lower salary, so you are not liable for Income Tax or National Insurance Contributions (NICs), but still contribute enough towards your state pension, and take the rest as dividends, which is subject to a lower tax rate.

Be aware that it may not always be possible to pay a dividend if your profits aren’t sufficient.

Structuring your company

When considering the distribution and management of share rights in a limited company, several key aspects must be carefully planned and managed. You will need to define how dividends are paid, voting rights and share structure.

At this stage, you may also need to discuss a future exit, including transfer, drag-along and tag-along rights.

As part of this process, you will need to address how the shares and shareholder rights align with the company’s Articles of Association.

Open a business bank account

Open a separate bank account for your business as soon as possible. Some founders make the mistake of thinking they can mix personal and business finances at the beginning, but it makes applying for reliefs and paying taxes more complicated as you have to declare what each transaction is for and when it was made.

Treat your business like a separate entity (because it is)

If you plan to inject personal funds into your company or take money out, do it properly through a Director’s Loan Account.

Make sure to detail each transaction going in and out of the business and never take out excessive amounts of money, as this can attract attention from HM Revenue & Customs (HMRC) and lead to fines.

If you are considering incorporation, you should seek professional advice and ongoing support to reduce the potential for errors and non-compliance with Companies House regulations.

Ready to take the next step? Contact us today for expert advice on incorporating your business.

If you are looking to plan your exit from your business, whether for retirement or to start your next venture, we know you want to achieve this as tax-efficiently as possible.

Employee Ownership Trusts (EOTs) are an increasingly popular way for business owners to exit while securing the future of their company and employees – not least because they offer significant tax savings over other exit strategies.

Understanding EOTs

As an exit strategy, an EOT is created when you sell a controlling interest (51 per cent of shares or more) to a trust set up for the benefit of your employees.

This trust buys and holds shares on behalf of the employees, who do not buy them directly, often financing the sale through future profits made by the business.

Updates in the 2024 Autumn Budget have clarified some points in the legislation around EOTs – meaning you must comply with certain rules to be eligible for Capital Gains Tax (CGT) relief.

The trustees must have paid fair market value for the business and there is now a more stringent ‘trustee independence requirement’, requiring at least half of trustees to be independent of the seller.

In practice, this means that you, or people connected to you, cannot make up more than 50 per cent of the trustees.

In practice, this means there must be at least one other trustee who is not connected to you, or you may be required to pay CGT up to four years after the sale, known as the ‘clawback’ period.

Are they tax-efficient?

EOTs offer several tax efficiencies over other forms of exit, such as a sale to a group or an independent buyer, including:

• CGT exemption – When you sell a controlling interest to an EOT, your gains are exempt from CGT if you meet certain requirements, allowing you to keep the full value of your shares.
• Inheritance Tax – Assets transferred into an EOT are excluded from your estate for Inheritance Tax purposes, making EOTs particularly handy for retirement.
• Income Tax benefits – EOTs are tax-efficient for employees too, offering tax-free bonus allowances of up to £3,600 per year.

Providing you abide by the latest regulations, EOTs can be a tax-efficient way of exiting your business.

Need advice on setting up an EOT? Contact us today.

Claiming allowable expenses when calculating taxable profit as a self-employed business owner is an important step in preparing your tax return.

It will ensure you are not paying more tax than you need to and help mitigate some of the costs of running your business.

If you work from an office or use one in the course of your business activities, there may be more scope for claiming allowable expenses than you think.

Office-based expenses

For some items, you can claim allowable expenses straight away, including items you would normally use for less than two years, or bills that normally cover a period of less than two years, such as:

• Rent and utilities
• Business rates
• Property insurance
• Stationery
• Phone and internet bills
• Postage
• Printing

For other expenses, what you can claim depends on the type of accounting you use.

If you use cash basis accounting, you can claim items such as computers, long-term software or repairs to your business premises as allowable expenses.

However, if you use traditional accounting, you should claim capital allowances for these longer-term items. This is usually applicable to sole traders or partnerships earning over £150,000 per year.

Home offices

You may be able to claim for a portion of costs such as heating, electricity or rent if you use part of your home for your business – although you will need a reasonable method of working this out.

For example, if you have six rooms in your house and use one as an office five days per week, you may be able to claim for a portion of the electricity costs.

With an electricity bill of £600 per year, you can claim £100 as reasonable expenses (assuming all rooms in your home use equal amounts of electricity). You work there five days per week out of seven, so you can claim £71.45 as expenses.

This will help to reduce the cost to you and your family of using your home for business.

Make sure you claim all expenses applicable to your office to ensure that you optimise your tax position and draw as much financial benefit from your business as possible.

For advice on claiming allowable expenses for office costs, please contact our team.

Sometimes, paying your tax bill on time can be difficult when costs are high.

If you miss a payment deadline or think you will miss one because you are unable to pay your tax bill, you must contact HM Revenue & Customs (HMRC) as soon as possible.

You may have the option to set up a ‘Time to Pay’ arrangement – a payment plan agreed with HMRC allowing you to pay your tax over a longer period.

You can do this online through your Government Gateway portal if you meet certain criteria:

• You have filed your latest tax return
• It is within 60 days of the payment deadline
• You owe £30,000 or less
• You do not have any other debts or payment plans with HMRC

You will have to contact HMRC directly if you do not meet these criteria.

You will be asked about your spending and income when you set up the payment plan.

If HMRC thinks you will not be able to make your payments according to the plan, you may be required to pay your bill in full.

Remember, you may be charged a penalty if you are late paying, which can be appealed if you have a ‘reasonable excuse’, such as issues with the online portal, serious illness or bereavement, or software failure.

Keeping track of the deadlines

You will have several other deadlines each year that you need to meet to remain compliant with legislation around Income Tax Self-Assessment (ITSA), including:

• Telling HMRC that you need to submit a tax return by 5 October (if you have not done one before)
• Submit a paper tax return by 31 October (if applicable)
• Submit an online tax return by 31 January
• Pay your tax by 31 January

These deadlines relate to the previous financial year, i.e. online tax returns and payment for the 2023/24 financial year are due by 31 January 2025.

One of the easiest ways to keep track of your Income Tax payments (as well as any other tax liabilities) is with the help of a qualified accountant.

If you need advice on reporting and paying ITSA, speak to one of our experts today.

Directors have the ability to draw income from a business in several ways, including through the extraction of profits from the business, which can create significant opportunities to manage tax liabilities.

Key tax rates and allowances for 2025/26

Here is what directors in England, Wales, and Northern Ireland need to keep in mind for the new tax year starting 6 April 2025:

• Personal Allowance: Stays frozen at £12,570 until April 2028.
• Dividend Allowance: Remains at £500, so anything above this will be taxed.
• Basic Rate Threshold: Frozen at £50,270.
• Additional Rate Threshold: Frozen at £125,140.

These frozen thresholds require you to plan strategically to make the most of your allowances and minimise tax liabilities.

Why you should consider combining salary and dividends

A combination of a small salary and dividends can be one of the most tax-efficient ways for directors to draw income, reducing tax and National Insurance liabilities.

A salary lowers your company’s taxable profits, while dividends are not liable for National Insurance Contributions (NICs), making them cost-effective.

Paying a salary above the NIC threshold also ensures your contributions count towards the state pension, helping with long-term financial planning.

However, one important thing to remember is that dividends can only be paid if your company is profitable, and then only to shareholding directors. If the company has a poor year, you may be limited to drawing just a salary, which could impact your financial stability.

How to structure your income for 2025/26

The two most common approaches for directors, depending on whether you qualify for the National Insurance Employment Allowance (NIEA), are as follows:

Option 1

If you are the sole employee in your company, you are unlikely to qualify for the NIEA, which exempts eligible businesses from paying employer NICs.

In this scenario, setting your salary at the Lower Earnings Limit (LEL) of £6,500 ensures you continue to qualify for National Insurance credits, safeguarding your state pension entitlement while remaining tax efficient.

• Salary: £6,500 per year
• Dividends: Up to £44,475 without exceeding the basic tax rate band

The first £6,070 of dividends (after accounting for your £6,500 salary) is covered by your personal allowance, and an additional £500 dividend allowance applies.

The remaining £37,405 is taxed at 8.75 per cent, resulting in a total tax liability of £3,273.

Option 2:

If your business has additional employees, you may qualify for the NIEA, which increases to £10,500 from April 2025.

This allows you to pay yourself a higher salary while still being tax-efficient.

• Salary: £12,570 per year
• Dividends: Up to £37,700, staying within the basic rate band.

This can be a favourable option as the tax on dividends remains the same as in option 1, and because by paying a higher salary, you will reduce your company’s Corporation Tax liability.

At a 25 per cent Corporation Tax rate, the additional salary could result in tax savings of around £1,800 or more.

Choosing the best option

The best approach depends on your company’s setup and your financial goals, as there is no one-size-fits-all solution.

A lower salary typically suits sole directors who want to keep things simple, while a higher salary benefits those eligible for the NIEA by offering additional corporation tax savings.

Speak with our expert accountants to review your circumstances and tailor a strategy that works best for you.

If you are a sole trader or small business owner using a double cab pickup (DCPU) for your work, now is the time to consider your options.

The Budget revealed a tax change for DCPUs that could have significant financial implications for both you and your business.

Whether you are looking to expand your fleet or replace an ageing vehicle, acting now could save you money.

What is a DCPU?

A DCPU is a type of vehicle that features a front passenger cab with a second row of seats for up to four passengers, four independently opening doors, a payload capacity of one tonne or more, and an uncovered pickup area behind the cab.

These vehicles are typically popular among landscapers, builders, and other tradespeople due to their versatility and practicality.

What is changing?

Today, DCPUs benefit from the favourable tax treatment typically applied to commercial vehicles.

This includes lower Benefit-in-Kind (BIK) charges for personal use, making them a cost-effective option for employees.

Additionally, businesses can take advantage of generous capital allowances, which allow them to claim up to 100 per cent of the vehicle’s purchase cost in the first year.

However, from 1 April 2025 for Corporation Tax and 6 April 2025 for Income Tax, all DCPUs will be treated as cars for tax purposes, including capital allowances, BIK, and certain deductions from business profits.

This change will have significant financial impacts, including:

• Employees using a DCPU for personal mileage will receive higher company car tax bills. A pickup that currently costs a higher-rate taxpayer around £1,800 per year in BIK could jump to over £10,000, depending on the vehicle’s CO2 emissions and list price.
• Businesses will no longer be able to write off the full cost of a DCPU in the year of purchase. Instead, these vehicles will be subject to capital allowance rates as low as six per cent per year, drastically reducing upfront tax relief.

If you purchase or lease a DCPU before April 2025, you will still be able to lock in and benefit from the current tax rules until at least 2029.

Planning your next move

So, the answer to our original question is yes. If you do not want to face the increased financial liabilities, purchasing or leasing your DCPU before April 2025 is the smart move.

Here is what you should consider:

Firstly, you should review whether any of your current vehicles need replacing or if expanding your fleet could make financial sense under the current tax regime.

Think carefully about whether it will be more financially beneficial to purchase the vehicle outright or lease one.

If you do decide to lease, try to avoid contracts extending beyond April 2029, as the new rules will eventually apply.

To minimise BIK charges, ensure any DCPU is strictly limited to work use.

For cars, the definition of private use is stricter, requiring robust controls like vehicle storage and insurance exclusions, which may not be practical for many businesses.

Want to know how buying or leasing a DCPU could affect your tax bill? Get in touch today!

With Christmas right around the corner, many of you might be looking into ways to spread the holiday cheer among your employees.

Maybe you want to give a box of chocolates to your executive assistant or a bottle of wine to your line managers – small gestures that brighten up the workplace.

Unfortunately, it is not as straightforward as simply heading to the shops and picking up presents for your team as these thoughtful gestures can have implications for your tax and National Insurance Contributions (NICs).

However, this does not mean you should shy away from offering such gifts.

If made correctly, they can remain tax-efficient while significantly boosting morale and fostering a positive workplace culture.

What are trivial benefits in kind?

Trivial benefits are small, non-cash gifts or perks given to employees.

For them to qualify as “trivial” in the eyes of HMRC, they must meet specific criteria:

• Each gift must cost £50 or less.
• The benefit cannot be cash or a cash equivalent (like gift cards exchangeable for cash).
• It must not be a reward for work or performance.
• The gift must not be part of an employee’s contractual benefits and cannot replace salary or bonuses.

Examples of trivial benefits include flowers, a theatre outing, or small seasonal gifts like hampers or wine.

There are also separate rules for Directors of a company. This allowance can be used multiple times throughout the tax year, but it’s crucial to ensure that the total value of all benefits does not exceed £300. Eligible benefits can range from gift vouchers and hampers to meals and team-building events, offering a varied and enjoyable selection of perks.

These benefits are exempt from both income tax and National Insurance Contributions (NICs), which enhances their appeal. To comply with HM Revenue and Customs (HMRC) rules, it’s important that these benefits are given on an occasional basis, as gestures of goodwill, and are not tied to the Director’s contractual duties.

Directors must keep detailed records of the benefits provided, including their cost, the date, and the reason, to ensure all conditions of the allowance are met.

Tax liabilities of trivial gifting

One of the most significant advantages of trivial benefits is their tax efficiency.

If these gifts meet the conditions set by HMRC, they are completely exempt from tax and NICs.

You will also not be required to report these qualifying gifts to HMRC, meaning there is no need to file a P11D form.

However, if a gift or benefit does not meet the criteria for trivial benefits, you must declare it to HMRC via the P11D process and pay any tax or NICs owed. If you are paying tax on employee benefits through your payroll, filing P11D forms is not required. However, you will still need to submit a P11D(b) to pay any Class 1A NICs due.

How to account for trivial benefits in your business

To maintain compliance, it is important to keep track of your trivial benefits.

You should document the details of each benefit including the date, who it went to, what it was, and how much it cost. This will make it easier to ensure you do not exceed the £50 limit.

It can also be beneficial to create a separate expense category for trivial benefits in your accounting system. This way, you can easily distinguish these gifts from other employee-related expenses and keep everything organised.

To incorporate tax-efficient gifting into your business strategy, please get in touch with our team.