Common questions

For a typical one-director company with no other employment income, a salary around the Personal Allowance of £12,570 can often be tax-efficient in 2026/27. The employer's National Insurance secondary threshold is £5,000, so earnings above that attract employer's NIC at 15%, subject to the relevant rules, and most single-director companies cannot claim the Employment Allowance. £5,000 is simply where employer's NIC starts, not a recommended salary level. Salary and the employer's NIC on it are generally deductible for Corporation Tax where incurred wholly and exclusively for the company's trade, and the value of that deduction depends on the company's Corporation Tax position: 19% at the Small Profits Rate, or 26.5% at the margin for a company within the Marginal Relief band. (26.5% is the marginal rate relevant to companies in that band, not a rate applied to the company's whole profit.) For many contractors that deduction outweighs the employer's NIC cost, which is why a salary at the Personal Allowance often works out better than capping it at £5,000. Above your chosen salary, dividends can often be a tax-efficient way of extracting profits: after the £500 dividend allowance they are taxed at 10.75% within the basic-rate band, 35.75% at the higher rate and 39.35% at the additional rate for 2026/27. Salary and dividends should not be viewed as a fixed formula, though: the optimal mix can change depending on your other income, the company's profits, Employment Allowance eligibility, pension contributions and whether the company is within the Corporation Tax Marginal Relief band. See our full salary vs dividends guide.

You normally need to register for VAT if your taxable turnover exceeds £90,000 in a rolling 12-month period, or if you expect it to exceed £90,000 in the next 30 days alone. Both tests apply. Taxable turnover means your VAT-taxable sales, not simply all money received by the company. Many contractors also consider voluntary registration below the threshold: if your clients are VAT-registered businesses, they can often recover the VAT you charge as input tax, subject to the normal VAT rules, which can make voluntary registration commercially attractive. You meanwhile reclaim input VAT on your own business costs. Whether the Flat Rate Scheme or standard VAT works better depends on your specific cost profile, and the Flat Rate Scheme's 16.5% rate applies only where the business meets the limited-cost business test for the period. See our VAT guide for the full breakdown.

IR35 (the off-payroll working rules) applies where a worker provides services through an intermediary, such as their own limited company, but would have been an employee if engaged directly by the client. Factors including the degree of client control, substitution rights, the degree of mutuality of obligation, financial risk and how the engagement operates in practice can all affect the employment-status assessment. Working remotely, using your own equipment or having multiple clients may be relevant, and having multiple clients can support the picture of being in business on your own account, but none of these factors is decisive on its own. IR35 status is determined on an engagement-by-engagement basis: the contractual terms and the actual working practices both matter, and each engagement has to be assessed on its own facts, which is not something this page can do for you. We provide practical IR35 guidance within Standard and Premium packages and refer to specialist contract reviewers when needed.

Where the close-company loan rules apply, an overdrawn director's loan account that is not repaid within nine months and one day of the company's year-end gives rise to a Section 455 Corporation Tax charge on the outstanding balance. Section 455 applies to loans and benefits made by close companies to participators where the statutory conditions are met, so it does not follow automatically from every payment to a director. The rate is linked to the dividend upper rate for the tax year in which the loan or benefit was made, not the tax year of the charge: 35.75% for loans made on or after 6 April 2026 and 33.75% for those made before it, so one balance can carry both. Separately, a director's loan can create an Income Tax charge on the director under the beneficial-loan rules. Broadly, no benefit arises where employment-related loans do not exceed £10,000 at any point in the tax year; above that a taxable beneficial-loan charge may arise unless an exemption applies or interest is paid at or above the official rate. These are two distinct consequences, a Corporation Tax charge on the company and an Income Tax charge on the director, and while both can apply to the same loan, neither is automatic. On reporting, mandatory payrolling of most benefits-in-kind now begins on 6 April 2027 rather than April 2026 as originally announced, and employer-provided loans are outside that mandate for the time being, so a beneficial-loan benefit is still reported on a P11D for 2026/27 unless it is being payrolled voluntarily. We monitor director loan balances proactively throughout the year and flag issues before they crystallise.

Companies generally need to keep accounting records for six years from the end of the relevant accounting period, and some records may need to be retained for longer depending on the circumstances. In practice that covers company accounting records (invoices, receipts, bank statements), VAT records where you are registered, PAYE and payroll records, dividend vouchers and board minutes for any dividends declared, and the statutory registers the company has to maintain. Using accounting software such as FreeAgent can make record-keeping easier by allowing receipts and supporting documents to be attached to transactions as they occur.

MTD for VAT already applies to your company if it's VAT-registered. MTD for Income Tax is different: it's for sole traders and landlords, so a director's salary and dividends on their own don't bring you in. It only matters if you also have self-employment or rental income.

What counts is your qualifying income: your self-employment and property income added together, before expenses. Salary, dividends and partnership profit shares are left out. You join MTD for Income Tax if your qualifying income was over:

• £50,000 in 2024/25: from 6 April 2026 (already live)
• £30,000 in 2025/26: from 6 April 2027
• £20,000 in 2026/27: from 6 April 2028

HMRC checks the figure on your Self Assessment return for that year. For example, your 2025/26 return, due by 31 January 2027, decides whether you join in April 2027.

Once you're in, you keep digital records in compatible software, send HMRC quarterly updates and still file a tax return after the year end.

Yes. Get in touch and we'll arrange a free 30-minute discovery call. This call is no-obligation: a chance to discuss your situation, ask questions, and confirm the right package for your needs.

We're a remote-first practice, so all communication is via email and video call by default. This keeps costs down (reflected in our fixed fees) and means quicker turnaround, with no need to coordinate diaries for travel. If there's a specific need for an in-person meeting, get in touch and we can discuss options.

Response times vary by package and apply to email. We acknowledge emails within two business days on Essentials, within one business day on Standard, and by 5pm on the same business day on Premium. An email that arrives after 5pm, or on a weekend or bank holiday, is treated as arriving on the next business day. An acknowledgement is not always the full answer: where a question needs work, we'll tell you when to expect a full reply. We're a one-person practice, so we close for holidays; we'll tell you at least two weeks in advance and who to contact if something can't wait. Routine compliance work (filings, returns) is scheduled proactively ahead of deadlines, so you won't need to chase these.

Routine questions and reasonable correspondence about the services in your package are included; that's part of the value of a fixed monthly fee. If a question develops into a substantial piece of advisory work (for example, modelling a company restructure or reviewing a complex contract), we'll let you know upfront and agree the fee in writing before proceeding. If it can't be priced in advance, we agree a cap with you first and come back to you rather than go past it. You'll never receive a surprise bill for a conversation.