Sidekick - Limited Company and Self-Employed Accountants

Most people know that the higher rate of tax kicks in at £50,270. Fewer people know what happens at £100,000, and it is one of the most important thresholds in the UK tax system.

Once your income exceeds £100,000, your personal allowance begins to reduce. For every £2 you earn over that threshold, you lose £1 of your personal allowance. By the time your income reaches £125,140, your personal allowance is gone entirely.

What this creates is an effective tax rate of 60% on income between £100,000 and £125,140. You are paying 40% income tax on that band, plus losing the allowance that would otherwise shelter income from tax altogether.

This is not a widely publicised quirk of the system. Many people earning in that range are completely unaware of it until they see their tax bill.

There are legitimate ways to manage this. Pension contributions are the most commonly used. A contribution that brings your adjusted net income below £100,000 restores your personal allowance in full, turning a 60% effective rate back into 40%.

The planning window here is the tax year itself. Once the year ends, the opportunity to act is gone.

If your income is approaching or within this range, it is worth having a conversation about your options now rather than after the fact.

DM us or tap the link in bio to find out more about how we can support you!

If your director's loan account is overdrawn, meaning you owe the company more than it owes you, and that balance is not cleared within nine months and one day of your company's accounting year-end, your company pays an S455 tax charge on the outstanding amount.

From 6 April 2026, that rate increased to 35.75% on any loans taken from that date. The charge is repayable when the loan is repaid, but it ties up a significant amount of cash in the meantime.

If the loan exceeds £10,000 at any point in the year, it is treated as a benefit in kind. National Insurance becomes payable by the company and the amount needs to be declared on your P11D.

Interest-free loans to directors are also subject to specific HMRC rules around the notional interest that should be charged.

None of this makes directors' loans something to avoid. It makes them something to manage properly and review regularly.

At Sidekick, this is exactly the kind of thing we track for every limited company client throughout the year, not just at year-end. Knowing your position before the deadline means you have time to act on it.

DM us to make sure your director's loan account is being managed correctly.

Since April 2021, the rules around IR35 have changed significantly for contractors working with medium and large private sector businesses. Understanding how those rules work is essential for anyone operating through a limited company in that environment.

Before the reform, contractors were responsible for assessing their own IR35 status. Since the reform, that responsibility sits with the end client, the business engaging the contractor, not the contractor themselves.

What this means in practice is that your client determines whether your engagement falls inside or outside IR35, and communicates that determination to you through a Status Determination Statement. If they determine you are inside IR35, they become responsible for deducting income tax and National Insurance before paying you, in the same way they would for an employee.

The implications of an inside IR35 determination are significant. You lose the ability to draw dividends from that income. Your effective tax rate on the engagement increases substantially. And while you are taxed like an employee, you do not receive employee benefits.

Challenging an incorrect determination is possible, and end clients are required to have a disagreement process in place — but it requires a well-documented case based on the actual working practices, not just the contract.

The key factors remain the same as they always have been. Control, substitution and mutuality of obligation. But now it is your client making the call, which means your contracts and day-to-day working practices need to be consistently aligned.

If you are a contractor unsure of your IR35 position, DM us. We can help you understand where you stand.

More people than ever have income coming from more than one source. An employed role alongside freelance work. A limited company alongside rental income.

Dividends, interest and self-employment income all in the same tax year.

When multiple income streams are in play, the way your taxes are calculated becomes more complex and the opportunities to plan effectively increase significantly.

The order in which different types of income are taxed matters. Non-savings income, which includes employment and self-employment income, is taxed first. Savings income comes next. Dividend income is taxed last. Each has its own rates and its own interaction with your personal allowance and the relevant tax bands.

This sequencing creates planning opportunities. Dividend income sitting in the basic rate band is taxed at 8.75%. The same amount taken as additional self-employment income could be taxed at 40%. The structure of how you draw income can make a meaningful difference to your overall liability.

National Insurance adds another layer. Class 2 and Class 4 contributions apply to self-employment profits.

Employment income carries its own NI obligations through PAYE. Dividend income carries none. Understanding what each income type costs in NI terms is part of making the right decisions.

There is also the interaction with the personal allowance, the higher rate threshold and the £100,000 taper to consider. With multiple income streams, it is easy to drift into higher tax territory without realising it.

Getting a complete picture of your income each year and planning around it properly is where the real savings happen.

DM us to speak to our Tax Specialist about your specific situation.

A P11D is a form submitted to HMRC by employers to report benefits in kind provided to employees or directors during the tax year. If your company provides anything of value beyond salary and dividends, there is a reasonable chance a P11D is required.

Benefits in kind are non-cash perks that have a monetary value. Common examples include a company car or car allowance, private medical insurance paid by the company, gym memberships, and director's loans exceeding £10,000.

Each benefit has its own HMRC-approved method of valuation. The resulting figure is added to the employee or director's taxable income for the year, meaning they pay income tax on it. The company also pays Class 1A National Insurance on the total value of benefits provided, currently at 13.8%.

P11D forms must be submitted to HMRC by 6 July following the end of the tax year. Any Class 1A National Insurance due must be paid by 22 July.

It is also possible to apply to payroll benefits in kind through your regular payroll rather than reporting them via P11D. This is known as payroll benefits and can simplify the process considerably, removing the need for a separate year-end return.

Missing a P11D or submitting incorrect figures results in penalties and potential interest charges. It is one of the year-end obligations that gets overlooked more than it should.

DM us to make sure your year-end reporting is complete and correct.

Sole trader or limited company: how to decide which structure is right for your business…

This is one of the questions we are asked most often, and the answer is not the same for everyone.

As a sole trader, you and your business are legally the same entity. Your profits are your income, taxed through self-assessment at income tax rates. It is simpler to set up and administer, but it offers no separation between your personal and business finances.

As a limited company director, your business is a separate legal entity. You pay corporation tax on profits, currently 19% for profits up to £50,000, and pay yourself through a combination of salary and dividends. The tax efficiency at higher income levels can be significant.

The general rule of thumb is that limited company status becomes more tax-efficient once your profits consistently exceed around £30,000 to £35,000 per year. Below that, the additional administration costs can outweigh the tax savings.

Income level is not the only factor. Limited company status also offers limited liability protection, can look more credible to certain clients, and offers more flexibility in how and when you extract profit.

It is also worth knowing that switching from sole trader to limited company mid-year has tax implications that need to be managed carefully.

The right structure depends on your income, your plans for growth, your industry and your personal circumstances. There is no universal answer, which is exactly why we take a personal approach.

DM our team to talk through which option is right for you.

Most people think of pensions as something to sort out eventually.

From a tax perspective, contributing to a pension now is one of the smartest financial decisions a business owner can make.

Here is why.

If you are a limited company director, your company can make pension contributions directly on your behalf. Those contributions are treated as allowable business expenses, which means they reduce your company's profit and, therefore, your corporation tax liability.

A £10,000 pension contribution from your company costs the company £7,500 after corporation tax relief. That money goes into your pension rather than to HMRC.

If you are self-employed, personal pension contributions reduce your taxable income. Every pound you contribute at the basic rate automatically receives 20% tax relief from the government.

Higher-rate taxpayers can claim additional relief through self-assessment.

There are annual allowance limits to be aware of, currently £60,000 per year or 100% of your earnings, whichever is lower. For most of our clients, there is significant room to contribute more than they currently are.

Pension planning is not just about retirement. It is a legitimate, HMRC-approved way to keep more of your money working for you.

If you have not reviewed your pension contributions recently, now is a good time to start.

Get in touch with us or find out more via the link in bio.

As a limited company director, you have two ways to pay yourself: salary and dividends.

Most people know this. Fewer know how to structure them properly.

Here is the general approach that works for most directors. Set your salary at the National Insurance threshold, currently £12,570 per year.

This keeps you in the HMRC system, protects your state pension entitlement, and means no National Insurance is due at that level.

Everything above that comes out as dividends, drawn from the company's post-corporation-tax profits.

Dividends are taxed at a lower rate than salary, 10.75% for basic rate taxpayers, compared to 20% income tax plus National Insurance on employment income.

The result is that more money stays in your pocket, legally and compliantly.

The exact split depends on your total income, your company's profit position, and whether you have other income sources.

Getting it wrong, or not reviewing it regularly, means you could be paying more tax than you need to.

This is one of the first things we look at with every new limited company client, and it is one of the most impactful.

If you are not sure whether your current salary and dividend split is working for you, it is worth a conversation.

DM us or tap the link in bio to speak to our Limited Company Specialist.

Running payroll looks straightforward until you are the one responsible for it. Then you realise how many moving parts there are, and how quickly a small error or missed deadline becomes a problem with HMRC.

Here is what a properly managed payroll service covers, and why each element matters.

RTI submissions. Every time you pay an employee, a Full Payment Submission must reach HMRC on or before the payment date. Late submissions result in automatic penalties. We handle every submission, every pay run, without exception.

PAYE calculations. Income tax and National Insurance must be calculated correctly for each employee, accounting for their tax code, any changes in earnings and any mid-year adjustments. Errors here mean either your employees are underpaid, or HMRC comes back to you for the difference.

Payslips. Employees have a legal right to a payslip on or before their pay date. We produce and distribute these as part of every pay run.

Auto-enrolment. If you employ staff above the earnings threshold, pension auto-enrolment obligations apply. We manage the assessment, enrolment and contribution calculations, keeping you compliant with The Pensions Regulator requirements.

Statutory payments. Sick pay, maternity pay, paternity pay, each has its own rules, rates and HMRC reclaim processes. We calculate and process these correctly so your obligations are met and you reclaim what you are entitled to.

Year-end reporting. P60S for all employees, P11D submissions for benefits in kind, and final RTI submissions, all handled and filed on time.

Payroll done properly is invisible. You pay your people correctly and on time, HMRC receives what it needs, and your compliance record stays clean.

DM us or tap the link in bio to find out how our Payroll Bureau service works.

If you work in construction and your payments are processed under the Construction Industry Scheme, tax is deducted at source before the money reaches you, typically at 20% if you are registered with CIS.

That deduction happens on every payment, throughout the year, regardless of what your actual tax liability turns out to be.

For many CIS contractors, the total amount deducted significantly exceeds what they actually owe. The difference is a refund, and it comes back to you through your tax return.

Here is the process.

Your CIS deductions are recorded on monthly statements from your contractor. At the end of the tax year, those deductions are set against your total income tax and National Insurance liability. If more has been deducted than you owe, HMRC refunds the difference.

The new tax year, which began 6 April, is the right time to start this process for the year just ended. The sooner your return is filed, the sooner any refund reaches you.

What we need from you is straightforward: your CIS payment and deduction statements, details of any other income, and records of your business expenses.

We handle everything from there, calculating your liability, preparing and filing your return, and making sure you claim every allowable expense to keep your bill, or increase your refund, as much as possible.

DM us today to get started.

Most business owners only see a clear picture of their finances once a year, at year’s end, when their accountant has pulled everything together, and the numbers are finally in front of them.

By that point, the year is over. There is nothing you can do with the information except file it.

Real-time bookkeeping changes entirely.

When your records are maintained as you go, transactions reconciled regularly, and income and expenses logged throughout the month, you have an accurate, up-to-date view of your business at any point in the year.

That means you can see whether your income is tracking where it needs to be. You can identify costs that are creeping up before they become a problem. You can make informed decisions about investment, hiring or pricing, based on actual numbers, not estimates.

It also means your quarterly MTD submissions are straightforward, because your records are already in order. Your year-end becomes a formality rather than a scramble. If HMRC ever asks questions, your documentation is clean and complete.

For our clients, real-time bookkeeping is not an add-on. It is the foundation that everything else sits on, including tax planning, payroll, MTD compliance, and financial decisions. None of it works properly without accurate, current records.

At Sidekick, this is built into what we do from day one. You have access to your numbers whenever you need them.

DM us or tap the link in bio to find out more.