Accounting Solution

THE 60% TAX TRAP — £100K TO £125,140

Nobody's headline tax rate is 60%. But between £100,000 and £125,140 of income, that's effectively what you pay.

Why: for every £2 you earn over £100k, you lose £1 of personal allowance. Stack that on top of 40% tax and the marginal rate hits 60% — before National Insurance.

The fix is usually pension contributions:

→ A contribution that brings your income back under £100k gets effective 60% relief
→ It can also restore tax-free childcare eligibility, which vanishes above £100k

If your income is anywhere in that band — salary, bonus, or a good year — this is one of the most valuable conversations you can have with an accountant.

📞 07534 476727
🌐 acctsolution.co.uk
📍 33 Bond Street, Brighton

EARNING OVER £60K WITH CHILD BENEFIT IN THE HOUSEHOLD?

The High Income Child Benefit Charge starts at £60,000 of income and claws back Child Benefit completely by £80,000.

Three things people consistently miss:

✔ It's based on the higher earner's individual income — not household income. Two earners on £59k each? No charge.
✔ Pension contributions reduce the income that counts. Some families keep their full Child Benefit simply by paying more into a pension
✔ Opting out of payments? Still make the claim — it protects the lower earner's State Pension record

If a pay rise has pushed you over £60k, this needs a look before your next tax return.

📞 07534 476727
🌐 acctsolution.co.uk

DIRECTORS' LOAN ACCOUNTS — THE QUIET TAX TRAP

Money taken out of your company that isn't salary, dividends, or expenses? That's a director's loan — and it has teeth.

→ Still outstanding 9 months after your company year end? The company pays a 33.75% charge (Section 455) on the balance
→ Over £10,000 at any point? That can trigger a benefit-in-kind — and P11D reporting
→ The s455 charge is refundable once the loan is repaid — but the refund is slow, and the cashflow hit is real

The classic pattern: drawings creep up during the year, and nobody notices until the accounts are done — with two months left to fix it.

If your loan account has crept up this year, deal with it before the clock does.

📞 07534 476727
🌐 acctsolution.co.uk

TRADES: VANS, FUEL & MILEAGE — TWO ROUTES, ONE CHOICE

Vehicle costs are usually the biggest expense for anyone on the tools — and one of the most common places money gets left behind.

→ Mileage rate: 45p/mile for the first 10,000 business miles, 25p after. Simple, no fuel receipts — it covers everything
→ Actual costs: fuel, insurance, servicing, repairs — plus capital allowances on the van itself

Which wins depends on your mileage, the van's cost, and how long you'll keep it. High-mileage older van? Mileage rate often wins. Expensive new van? Actual costs usually beat it.

One rule: once you've picked a method for a vehicle, you stick with it for that vehicle. Choose right at the start.

📞 07534 476727
🌐 acctsolution.co.uk

RENT A ROOM — £7,500 A YEAR, COMPLETELY TAX FREE

Let a furnished room to a lodger in your own home and the Rent a Room scheme covers up to £7,500 a year of income with no tax at all.

Worth knowing:

✔ It applies to your main home — a lodger, not a separate flat
✔ Below £7,500, there's usually nothing to report
✔ Above it, you choose: pay tax on the excess over £7,500, or work out actual profit — whichever is lower
✔ If two of you share the income, the allowance splits to £3,750 each

In a city like Brighton with strong lodger demand, plenty of homeowners qualify without realising the scheme exists.

📞 07534 476727
🌐 acctsolution.co.uk

MARRIED LANDLORDS — WHO PAYS THE TAX ON YOUR RENT?

Jointly owned rental property between spouses is taxed 50/50 by default — even if one of you pays 40% tax and the other has unused personal allowance.

With the right paperwork, it doesn't have to work that way:

→ A declaration of trust adjusts the beneficial ownership split
→ Form 17 tells HMRC to tax income in line with actual ownership
→ Income then follows the split — for many couples that's hundreds or thousands saved every year, entirely legitimately

The catch: it must be done properly and in the right order, and Form 17 has a 60-day deadline from signing the declaration.

📞 07534 476727
🌐 acctsolution.co.uk
📍 33 Bond Street, Brighton

LANDLORDS: REPAIRS VS IMPROVEMENTS — GET THE LINE RIGHT

One of the most common errors on rental accounts, and it cuts both ways:

🔧 Repairs — restoring what's already there. Like-for-like boiler replacement, repointing, fixing a roof leak, replacing a broken window. Deductible against rental income this year.

🏗️ Improvements — making the property better than it was. Extensions, loft conversions, upgrading to premium fittings. Capital — relief only comes when you sell, against CGT.

Claim an improvement as a repair and you've got a problem if HMRC enquires. Treat a repair as capital and you're overpaying tax today.

The distinction isn't always obvious — a new kitchen can fall either side of the line depending on spec.

📞 07534 476727
🌐 acctsolution.co.uk

SIDE HUSTLE INCOME — HMRC CAN ALREADY SEE IT

eBay, Vinted, Etsy, Airbnb, Deliveroo — online platforms now report seller data directly to HMRC under international reporting rules.

The rules themselves haven't changed:

→ Under £1,000 a year from selling or services? The trading allowance usually covers it — nothing to declare
→ Over £1,000? You may need to register for Self Assessment and declare it

What has changed is visibility. HMRC is matching platform data against tax records and writing to people whose numbers don't line up. Ignoring one of those letters is the worst possible move.

If you've got a side income and you're not sure where you stand, it's a ten-minute conversation — much cheaper than a penalty.

📞 07534 476727
🌐 acctsolution.co.uk
📍 33 Bond Street, Brighton

SELLING A BUY-TO-LET? HERE'S THE CGT PICTURE

Capital Gains Tax on a residential investment property is charged at 18% (basic rate) or 24% (higher rate) — and it applies to the gain, not the sale price.

What reduces the gain:
→ Purchase price + legal/stamp duty costs
→ Improvement costs (not maintenance — actual improvements)
→ Selling costs (agent fees, legal)
→ Annual CGT exemption (currently £3,000)

What doesn't help as much as people think:
→ You cannot claim private residence relief if it was never your main home
→ You cannot offset mortgage interest against the gain

Timing matters. If you're close to the basic/higher rate threshold, selling in a year with lower income can save real money. Splitting ownership with a spouse or civil partner can also use two exemptions.

If you're thinking about selling, the conversation needs to happen before you instruct an estate agent — not after.

📞 07534 476727
🌐 acctsolution.co.uk
📍 33 Bond Street, Brighton

SALARY VS DIVIDENDS — GETTING THE EXTRACTION RIGHT

One of the most common mistakes I see from company directors: taking money out in a way that costs more tax than it needs to.

The standard approach for a sole director:

→ Pay yourself a salary up to the NI Secondary threshold (around £9,100 this year) — this keeps your NI contributions low while still counting as a qualifying year for State Pension
→ Take the rest as dividends — taxed at 8.75% (basic rate) or 33.75% (higher rate), no NI

The nuances:

✔ Dividend allowance is currently £500 per person — use it
✔ If your spouse/civil partner is a shareholder, they can also draw dividends using their allowance and basic rate band
✔ If profits aren't being drawn, pension contributions from the company are often more efficient than dividends
✔ Getting this wrong — taking a large salary or drawing above the higher-rate threshold without planning — is unnecessary tax

This is one of the cleaner wins in tax planning, but it needs to be set up and reviewed each year.

📞 07534 476727
🌐 acctsolution.co.uk