How much State Pension you get depends on your National Insurance (NI) record when you reach the State Pension age.

Gaps in your NI record could affect how much you receive. Unfortunately, too many sole traders are still missing out on the full State Pension due to a range of factors.

Why are National Insurance Contributions important?

A full State Pension requires 35 years of NI contributions or credits.

Missing even a few years can have a significant impact on the amount you receive, leaving you with less financial security in retirement.

Furthermore, if you do not meet the minimum of ten qualifying years, you will not receive a State Pension at all.

Why are sole traders missing out?

Employees usually have their NI contributions paid for them by their employer, but sole traders must pay the contributions themselves.

Unfortunately, many sole traders do not realise that they need to make these payments to qualify for the State Pension.

How do I make National Insurance contributions?

You can make NI contributions as part of your Self-Assessment tax return.

Furthermore, if there are periods when you are out of work, you can use NI credits to cover any shortfalls in your contribution record.

You can also claim NI credits if you are out of work due to childcare responsibilities or illness.

For example, those claiming Child Benefit are eligible to claim NI credits.

You can check your NI record and top up your NI contributions through the Government Gateway.

Prepare for your retirement with a full State Pension

Your NI record plays a key role in determining the value of your State Pension, so it is essential to keep on top of your NI contributions and fill any gaps in your record.

By staying proactive about your NI contributions, you will avoid any nasty surprises when you reach the State Pension age.

If you think you might be missing out on the full State Pension, we can help.

Contact us today for further guidance on making NI contributions and protecting your State Pension.

On 8 April 2025, Companies House introduced identity verification for those who make filings on behalf of a business.

It is currently a voluntary process, but will become mandatory for new businesses by the end of the year and mandatory for everyone within 12 months of their most recent filings.

Who needs to verify their identity, and how do they do it?

You will need to have your identity verified to ensure you can file with Companies House if you are any of the following:

• A director
• A Member
• A general partner
• A managing officer
• A person with significant control
• Or someone who files for the company, like a company secretary

As with most identity verification, the accepted forms of photo ID are:

• Biometric passports from any country
• UK full or provisional photo driving licences
• UK Biometric Residence Permits and Cards
• UK Frontier Worker Permits

You may also need your current address and the year that you moved in to verify your occupancy in the UK.

Verifying your identity is free when done directly with Companies House and will involve using your GOV.UK One Login and providing the relevant evidence.

Alternatively, you can have your identity verified by an Authorised Corporate Service Provider (ACSP). Your accountant will likely be registered as an ACSP.

ACSPs have committed to upholding anti-money laundering regulations and can make filings on behalf of businesses, as well as verifying identities.

Those in limited partnerships must use an ACSP for identity verification and filings as of 2026.

Once an identity is verified, it will remain so until any significant details change, such as changes to your name or address.

To stay compliant with the Companies House changes, speak to our team today!

The International Monetary Fund (IMF) has upgraded the UK’s 2025 GDP growth forecast to 1.2 per cent, citing a strong first-quarter performance and signs of a recovering economy.

The official figures indicate that increases in customer spending and business investment have contributed to this economic growth.

These early signs of recovery present an opportunity to reassess your strategy and position your business for growth.

Economic recovery strategies for your business

There are several strategies you may wish to adopt to capitalise on this predicted recovery.

• Review your cash flow – In a recovery, opportunities often require immediate investment. Cash reserves can support recruitment, marketing, or stock increases without relying heavily on borrowing.
• Amend your pricing strategy – A recovering economy typically brings inflationary pressures. Revising your pricing strategies helps to ensure your prices reflect increased costs without damaging customer relationships.
• Invest in tech – If you delayed technology upgrades during the slowdown, you may wish to invest in digital tools to enhance your business’s efficiency.
• Assess supplier relationships – Recovery periods can also put pressure on supply chains, as demand often outpaces supply. Strengthen relationships with key suppliers and review your contracts to reduce the risk of delays and secure competitive terms.
• Align your team – Ensure your team understands the business’s objectives during the recovery period. A clear direction helps people focus on the right priorities and act quickly when opportunities arise.

Although signs of economic recovery are emerging, the outlook remains uncertain, especially as many of the recent figures fail to factor in the impact of new employment costs.

If your business begins to see an upswing, you will need to prepare for the potential tax implications that may follow renewed profitability.

Proactive tax planning with your accountant can help you make the most of available reliefs and avoid any unwelcome surprises.

Contact us today to put a forward-thinking tax strategy in place for your business.

Public borrowing hit £20.5 billion in April, the highest level for that month since 1993 and nearly £3 billion above forecast.

Economists warn the Chancellor may have little choice but to plug the gap with tax rises, spending cuts or changes to fiscal rules if elevated levels of borrowing persist.

While nothing is confirmed, several areas are drawing speculation.

Income Tax

Extending the Income Tax threshold freeze beyond 2028 could push millions of people into higher tax brackets, because inflation-driven wage increases are not being matched by rises in tax thresholds.

More retirees are also being caught out with the full new State Pension edging closer to the £12,570 personal allowance.

Those with additional income from private pensions or savings could soon face basic rate tax, or higher, where none applied before.

Utilising allowances, such as the starting savings rate or Marriage Allowance, can help mitigate the impact.

Cash ISAs

There is widespread speculation that the £20,000 annual tax-free allowance will be reduced to encourage people to invest in the stock market.

A lower limit would reduce options for cash savers and expose more of your savings interest to tax.

Making full use of the allowance early in the tax year could offer some protection against mid-year rule changes.

Inheritance Tax

A revision to the seven-year gift rule is also reportedly under consideration.

Individuals planning to transfer wealth should consider acting while current rules remain in place.

On top of this, many families will also have to contend with the nil-rate freeze until 2030 and the inclusion of unspent pensions within the scope of IHT from 2027, which could already bring many more estates within the tax regime.

Stamp Duty Land Tax

Surcharges on second homes have already risen to five per cent in England and Wales.

A further rise to match Scotland’s eight per cent is not out of the question.

Buyers should factor in potential changes before committing to new property investments.

With so much uncertainty, now is the time to seek expert guidance and ensure your finances are as future-proof as possible.

Contact us for a thorough tax review and proactive advice tailored to your needs.

Receiving a Kittel VAT notice is something that many businesses dread.

HM Revenue and Customs (HMRC) can demand the repayment of tax already reclaimed, and this can sometimes amount to a significant amount of money.

The notice comes when a trader “knew or should have known” their transaction was linked to fraudulent evasion of VAT.

This makes it ineligible for a deduction of input tax.

Kittel VAT can seem like an ever-present threat hanging over traders, but there are ways to reduce the risk.

How do Kittel VAT notices get issued?

To issue a Kittel VAT notice, HMRC must establish three key elements. They need to determine that:

• VAT was fraudulently evaded
• The trader’s transaction was connected with that fraud
• The trader knew, or ought to have known, of this connection

If any of these components is missing, a Kittel VAT notice will not be issued.

The European Court of Justice (ECJ) judgement in the case of Axel Kittel & Recolta Recycling SPRL is the originator of the term, and the ruling left the exact definition of “knew or should have known” undefined.

Defining the term could have opened loopholes that businesses may have attempted to exploit, which could have jeopardised HMRC investigations.

How to avoid Kittel VAT notices?

Due diligence is the best way to avoid Kittel VAT notices.

Conducting the necessary checks that should be part of your anti-money laundering processes should allow you to avoid engaging with conduct that will leave you vulnerable to Kittel VAT notices.

You should, therefore, always conduct robust supply-chain due diligence and ensure you understand the nature of all transactions made by your business.

If you ever have any doubts, it is best to raise concerns immediately, as it may not just result in a Kittel VAT notice, but more severe instances of fraud.

You may be treated as an accomplice to this fraud if you do not perform sufficient due diligence.

Reduce the threat of the Kittle VAT Notice, speak to our team today.

The delay to payrolling Benefits in Kind (BIK) to 2027 may seem like a cause of relief for many businesses who are concerned about the extra responsibility the changes will bring, but employers should still prepare for this landmark change.

Rather than filing an annual P11D form, the changes to payrolling BIK will force businesses to complete additional admin every month.

Though the 2027 deadline may seem far off, it is worth preparing now, as the deadline is unlikely to be extended again.

What are the changes to payrolling Benefits in Kind?

The main change is the transition from an annual filing to a monthly one.

As BIK will form part of the monthly payroll, it will be subject to the same monthly tax and National Insurance Contributions (NIC) as other employee expenses.

This could impact the cash flow of unprepared businesses.

The more regular payments could reduce working capital in the short term, as monthly expenses increase.

Over time, the smaller, more regular payments should allow for better cash flow management, as the expenses associated with BIK can be managed throughout the year.

Be aware that even with this change, there is still a need to produce an annual summary of BIK, and this must be ready for 1 June.

This dual reporting increases the administrative load for businesses, who will have to endure monthly filings, as well as the compilation of an annual report.

How to prepare for the changes to Benefits in Kind

Updating your benefits policy early is advisable, as you can figure out any issues before the deadline.

While payrolling BIK is still voluntary, it is worth becoming an early adopter so that you can adjust your business operations and ensure compliance before the 2027 deadline.

Getting used to that additional burden of having to incorporate BIK into your monthly payroll may take some time, so giving yourself that opportunity to perfect the system before there is a threat of penalties is wise.

At the very least, beginning to track benefits monthly can lay the groundwork for transitioning to payrolling BIK and will help you file your final P11D in 2026, making the annual report easier to compile.

If you already payroll BIK, do not forget to re-register before 5 April 2027, as failure to do so will cause you to become noncompliant.

Take the time to get ready for payrolling Benefits in Kind. Speak to us today.

It is not uncommon for directors of a company to take loans from the business during each financial year, often to cover unexpected bills.

However, you must keep track of any directors’ loans – money withdrawn from the company that is not a salary, dividend, or business expense repayment or a loan made by a director to the company – in a directors’ loan account (DLA).

A DLA is crucial for establishing your personal and company tax obligations.

There is no legal limit on how much you can borrow, but if you withdraw more than £10,000 from your company, then interest or a Benefit in Kind charge must be paid by the director.

Here are three easy ways to manage your directors’ loan accounts.

Interest on loans

Your company has the freedom to set the interest rate on any loan it provides to a director.

That said, if the interest is set below HMRC’s official rate, the difference could be treated as a taxable benefit.

In other words, the director may face a personal tax charge based on the gap between the rate they are paying and the official rate set by HMRC.

It is worth noting that HMRC’s official interest rate is not fixed. It can fluctuate in response to changes in the Bank of England base rate.

Avoid being overdrawn at the financial year-end

Being overdrawn on a DLA can carry a number of significant tax implications.

If the DLA of a close company (i.e., a company with fewer than five directors) is in debit nine months and one day after the organisation’s year end, a tax charge called a Section 455 (S455) will apply at a rate of 33.75 per cent.

S455 is repayable to your company nine months after the end of the accounting period in which the loan was repaid.

However, the time between paying the loan and receiving a tax refund could negatively affect your company’s cash flow, so it is best to avoid being overdrawn at the financial-year end, where possible.

Reduce Corporation Tax on company loans

Corporation Tax is not liable on the money you lend to your company.

If you charge interest on a loan to the company, this will count as both personal income for you and a business expense for the company.

You must report your income on a Self-Assessment tax return, while the company must report and pay Income Tax (minus the interest) at the basic rate of 20 per cent every quarter using form CT61.

Contact us today for further advice on managing your directors’ loan accounts.

Capital allowances allow businesses to claim tax relief on money invested in assets like machinery, equipment, or certain vehicles used commercially.

There are a variety of capital allowances available, including:

• Full Expensing
• Annual Investment Allowance (AIA)
• Writing-Down Allowances (WDA)

The allowance that your business is eligible for depends on what you buy, how much you invest, and how your business is structured.

Full Expensing

Full Expensing allows companies to deduct 100 per cent of the cost of qualifying plant and machinery assets from taxable profits in the year of purchase.

This applies to new assets only and is available to limited companies subject to Corporation Tax.

It is an ideal option if you are looking for immediate relief or using the investment to improve cash flow.

Annual Investment Allowance

The AIA offers a similar benefit but is more widely available to sole traders, partnerships, and limited companies.

This allowance allows for 100 per cent relief on qualifying expenditure up to £1 million per year.

Unlike Full Expensing, AIA can apply to both new and used assets, though exclusions can apply to assets such as leased items.

Writing-Down Allowances

WDAs apply to any expenditure that exceeds the AIA threshold or when assets are not eligible for Full Expensing or the AIA.

These allowances offer tax relief spread over several years, typically at a rate of relief against profits of 18 per cent for main pool items and six per cent for special rate pool items, like integral features or solar panels.

How to claim capital allowances

Capital allowances must be claimed within your tax return and can be set against your business’s taxable profits. Eligible items must be used in your business, not for personal use.

There are additional schemes, such as Enhanced Capital Allowances, which can be used for “eco” investments, which may also be useful to certain businesses.

For a full list of qualifying items and further guidance on how to claim, please visit gov.uk/capital-allowances or speak to your tax adviser.

If you would like to know more about the capital allowances available to your business, please get in touch.

Business owners who pay themselves through a combination of salary and dividends should revisit their remuneration strategy this tax year.

With Income Tax thresholds frozen until 2028 and a lower dividend allowance rate of £500, a strategy that once worked may now cost more than it saves.

How should you be paid as a director?

A salary of £12,570 uses the full Personal Allowance and qualifies you for National Insurance (NI) credits without triggering personal Income Tax or employee NICs.

This regular salary combined with dividends, where payable, and a generous pensions scheme, could help you to reduce the amount of Income Tax that you are liable to pay.

If your company qualifies for Employment Allowance, which has now increased to £10,500, even employer NICs can be mitigated.

Lower salaries of around £6,500 may suit directors with other sources of NIC credits or pension plans, while avoiding employee contributions altogether.

Dividends

You need to remember that any dividend income above £500 will be taxed at the dividend tax rate of 8.75 per cent, 33.75 per cent or 39.35 per cent, depending on your marginal rate of Income Tax – basic, higher and additional, respectively.

While dividend tax rates remain lower than Income Tax rates, the reduced allowance – introduced in the last few years – means higher effective rates for many than they have previously experienced in the past.

However, a carefully planned director’s remuneration strategy, which incorporates dividends, can still help to minimise an individual’s annual tax bill.

When dividends cannot be paid to directors

Your company’s profitability and your shareholding will determine how much dividends you can pay yourself, as dividends can only be paid from retained profits after Corporation Tax.

As long as you have made profits in the past, and those accumulated profits exceed any accumulated losses, then distributable reserves exist to pay dividends.

If these conditions are not met, then you may be limited to drawing a normal salary.

Setting your remuneration strategy

A blend of salary and dividends remains one of the most popular ways for directors to pay themselves, but achieving the most tax-efficient approach now involves carefully adjusting your income to reduce the amount of earnings that fall within higher tax bands.

You should speak to an experienced tax adviser to ensure your strategy aligns with the latest thresholds, minimises your tax liabilities, and allows you to keep more of your income.

Could you be paying less tax with a smarter remuneration strategy? Contact us today

Recent Government estimates suggest that as much as £1.8 billion is lost every year due to tax avoidance schemes.

That money, designated to fund schools, hospitals and other essential services, is in part, leading the Government to borrow more than expected.

As a result, HM Revenue & Customs (HMRC) is being given additional powers to crack down on tax avoidance and protect the public purse.

What new powers will HMRC have?

The focus of the reforms centres on an expansion of the Disclosure of Tax Avoidance Scheme (DOTAS).

A new hallmark – a specific feature or condition used by HMRC to identify tax avoidance schemes that must be disclosed – will be introduced to explicitly catch the schemes that are slipping under the radar of existing hallmarks.

This will be combined with a stricter liability offence if someone fails to notify arrangements under DOTAS.

Whether the avoidance scheme is effective or not will have no bearing on the illegality of engaging with it, and being caught will result in an unlimited fine and up to two years in prison.

HMRC will also be given the power to determine the penalty directly, leaving promoters the option to appeal to a tribunal should they feel unjustly served by the decision.

Both a Universal Stop Notice (USN) and a Promoter Action Notice (PAN) will be enacted, ensuring that those promoting and enabling schemes, or those working with promoters, stop immediately upon receiving the notice.

These stop notices form part of the targeted action that is being taken against legal professionals who provide advice and support promoters.

Time to act

HMRC want to make it clear that any involvement with tax avoidance schemes will no longer be tolerated.

As such, the onus is on you to ensure that you report any suspected attempts at tax avoidance immediately, lest you feel the consequences of collusion.

If you believe that you may have been involved in a tax avoidance scheme and need guidance, speak to our team today.