Getting money out of your company, it's complicated now.

Once upon a time, the go-to advice for director/shareholders was simple: take a tax-free salary up to your personal allowance and draw the rest as dividends. Job done. These days? Not quite.

Now, the only honest answer is: it depends.

Before deciding how to extract profits, a few key factors need to be considered—think of it as your company’s financial fingerprint:

• How much profit your company is making (which affects your Corporation Tax rate),
• Whether there’s more than one director/shareholder involved,
• What other income you’ve got (which might eat into your personal allowance),
• Whether the business qualifies for the £10,500 Employment Allowance,
• Whether you need a salary to qualify for things like pensions or mortgages,
• And—believe it or not—your age (those over State Pension age skip employees’ NICs).

It’s also worth asking: do you actually need all the funds right now? Taking everything out may land you with a larger tax bill. Leaving cash in the company could defer tax—or even help you benefit from Business Asset Disposal Relief if you sell up later.

In many cases, the old model still holds: a salary of £12,570 plus dividends to meet your personal needs. But don’t assume—it’s worth running the numbers. If you're unsure, give us a shout. Tailored advice really matters here.

Help with Summer Childcare Costs: Don’t Miss Free Government Top-Ups

If your summer childcare plans include nurseries, clubs, or even summer camps for children under 12, it might be time to open a Tax-Free Childcare account.

Here’s how it works:

• You save money into the account,
• The government adds 25%—up to £2,000 per child per year (more if your child is disabled),
• You use the account to pay registered childcare providers.

It doesn’t even need to be the parents contributing—grandparents, aunts, uncles can chip in too. What matters is that the child benefits.

Just one note: if either parent earns over £100,000, you won’t qualify this year.

Employers—this is also worth flagging to your teams. Uptake is lower than expected, and a quick mention in staff communications could go a long way.

Salary Sacrifice Pensions: Big Savings, If You Do It Right

A well-run salary sacrifice pension scheme can boost retirement savings while cutting NIC bills for both employers and employees. Win-win, right?

Here’s the gist:

• The employee agrees to give up part of their gross salary,
• The employer then pays that amount into their pension instead,
• Because pensions contributions are an exempt benefit, National Insurance is saved on both sides.

Sounds great, but there are a few caveats:

• Watch out for Minimum Wage rules—the sacrificed salary can’t take someone below the legal threshold,
• Think about statutory pay (like sick pay or maternity pay), which could be affected by the reduced gross salary,
• Auto Enrolment responsibilities still apply, and employee contracts must be properly updated.

Communication is key here—employees need to understand the implications. If you're thinking of setting one up, let’s talk it through together first.

MTD and Jointly Owned Property: What Landlords Need to Know

If your combined business and property income was over £50,000 in 2024/25, you’re heading into Making Tax Digital (MTD) for Income Tax from April 2026. And yes, joint property owners, this includes you.

By default, you’ll need to log income and expenses using HMRC's prescribed categories and submit digital quarterly updates. But here’s the good news: there are a couple of helpful easements.

If you qualify:

• You can report just ‘income’ and ‘expenses’ each quarter (no detailed breakdowns) if your turnover is under £90,000,
• And if the property is jointly owned, you can submit one total figure for income each quarter, and a single annual expense figure in the final update.

Yes, you can combine these two easements. If that sounds like a much easier way to meet your MTD obligations—you’re absolutely right. And we’re happy to walk you through it.

VAT and Private Tuition: A Case to Watch

A recent tribunal case (Rushby Dance & Fitness Centre v HMRC) reinforced that not all private tuition is VAT-exempt—even when it seems educational.

For private tuition to be exempt from VAT, two conditions must be met:

1. The tutor must be working independently (i.e., not as an employee or through a limited company),
2. The subject must be something ordinarily taught in schools or universities.

In this case, the dance instructors lost. The tribunal decided that ballroom, Latin, sequence dancing, and “dancercise” aren’t core school subjects.

The line between exempt and taxable tuition can be blurry. (Yes to golf and horse riding, no to yoga and belly dancing.) So if you’re offering private tuition—especially through a company—it’s best to check the VAT rules carefully.

Dates for Your Diary: Key Deadlines in July & August 2025

Still reading? You deserve a tea break.

And if any of the above sparked a question—or even just a raised eyebrow—give us a call or drop us a line. We’re here to help.

Categories: Positive Accountant