As schools break up for the summer and routines slow down a little, many contractors find themselves with a rare opportunity – time.

Whether you’re planning a getaway or just enjoying a quieter inbox, the summer break is a great opportunity to hit pause and refresh your thinking.

However, rest doesn’t just mean lying on a beach, it can also mean reflecting on your success and recharging both your energy and your business.

Review your contracts

First things first, when was the last time you properly reviewed your existing contracts?

Not just for dates and deadlines, but for things like:

• Are your rates still fair and reflective of the value you deliver?
• Do your terms protect you if things go wrong?
• Are there recurring clauses you’d now negotiate differently?

Taking stock of your current agreements with clients, suppliers or agencies can help you identify gaps or inefficiencies and prevent future headaches.

It’s also a good time to check for auto-renewals or upcoming notice periods that might need your attention.

Prospect for future work

The quieter summer months can be perfect for warming up old leads or exploring new opportunities.

Use this time to:

• Update your portfolio or website
• Reach out to past clients just to say hello
• Check in with recruiters and update your availability
• Research upcoming projects or industries you’d like to target

Even one well-timed message could open the door to your next contract or help keep you on businesses radars for future projects and work.

Check in on your finances

It’s easy to fall into a rhythm of ‘earn, invoice, repeat’ when you’re flat out, but how healthy is your business behind the scenes?

Use the summer to get a clearer picture:

• Are you saving enough for tax and downtime?
• Is your pricing still sustainable?
• Do you know which clients are most profitable?

Reset how your business runs

Improving how your business operates could give you more time to focus on what you do best and maybe even enjoy a few more guilt-free holidays.

Don’t forget to rest

Of course, not everything has to be productive. One of the best things you can do for your business is to look after its biggest asset, you.

Make sure you take time to properly switch off by reading a book, going somewhere new, spending time with your family – all without your inbox.

You’ll be surprised how many great ideas come when you’re not looking for them.

You don’t need to overhaul your business this summer, but a few thoughtful tweaks can make a big difference. Review what’s working, fix what’s not, and give yourself permission to rest.

This month saw us celebrate Father’s Day, but fathers and mothers alike often miss out on a helpful financial boost due to the complexities behind child benefits.

As a contractor or freelancer, you may have periods in the year when you are or aren’t working, which means that your income year to year fluctuates, making the rules surrounding this benefit even more complex.

Child Benefit stands as a key component of the UK’s family support system, offering a regular payment to assist with the costs of raising children.

If you are a contractor, it is essential to regularly re-evaluate your eligibility for Child Benefit and establish whether you are required to pay charges.

Here’s a quick recap on the basics of Child Benefit and how you can claim.

What do I get from claiming Child Benefit?

For the fiscal year 2025/26, Child Benefit is set at £26.05 per week for the eldest child and £17.25 per week for each additional child.

It covers children up to the age of 16 or 20 if they continue in approved education or training.

Contrary to some misconceptions, Child Benefit itself is not subject to income tax and is paid tax-free to all eligible recipients, regardless of their income level.

However, families where the highest earner’s income exceeds £60,000 are subjected to the High-Income Child Benefit Charge (HICBC), which effectively reduces the net benefit for these households through a tax charge.

This means that while the benefit itself is not taxed, the HICBC can diminish the financial advantage it provides to higher earners. The tax charge escalates by one per cent of the child benefit received for every £200 of income above £60,000 up to £80,000.

So, at £70,000 you’ll be paying back 50 per cent of the payments.  At £80,000, the charge eliminates the child benefit entirely.

However, it may still be worth registering for Child Benefit even if you need to pay HICBC, because you can still benefit from National Insurance credits towards your state pension, and your children will still automatically receive a National Insurance number when they reach the age of 16.

How to claim Child Benefit

Only one person can get Child Benefit for a child, so you need to decide whether you or the other parent should claim.

If you live together, only one of you can claim the higher rate for the eldest child in the household.

Income variability poses a significant challenge for contractors in determining their eligibility for Child Benefit.

To establish whether you will need to pay HICBC, you will need to calculate your adjusted net income.

This is your total taxable income (including savings and dividends) before any personal allowances and minus charges such as Gift Aid.

Making use of the Government’s Child Benefit tax calculator can help you estimate your adjusted net income and ascertain your potential liability under the HICBC.

Furthermore, strategic financial planning, such as increasing pension contributions, can effectively reduce adjusted net income, potentially mitigating the impact of the HICBC.

The rates of mortgages have dropped below four per cent, and many people are looking to take this opportunity to buy a new home or switch their existing mortgage.

There are a wide variety of reasons why a homeowner may want to consider restructuring their mortgage.

Maybe your current mortgage is coming to an end, or you now own a larger percentage of your property and are looking for a better deal than your current mortgage.

Perhaps you are planning to release some of the equity in your property by borrowing more, or you want to beat an upcoming interest rate increase.

The value of your home might have increased substantially since you first bought it, which could mean you are eligible for lower interest rates.

What are the challenges for contractors?

If you have become a freelancer, are self-employed or are the director of your own company, you may find it more difficult to obtain a mortgage than you did when you were employed by a company.

This is because lenders must see evidence of your income to give you a mortgage, and the variable nature of a contractor’s income can make it more difficult to meet strict income criteria.

Here are some general tips that may help you:

• Maintain a strong track record – Lenders like to see consistency, so aim to provide at least two to three years of accounts, contracts, or tax returns that demonstrate steady income.
• Build a healthy deposit or equity – A larger deposit or higher equity in an existing property can reassure lenders, reduce the loan-to-value ratio, and show that you can manage your finances despite fluctuations in income.
• Keep detailed financial records – Stay on top of your bookkeeping. Well-organised accounts, invoices, and proof of regular contracts help demonstrate stability to lenders.
• Avoid long gaps between contracts – If possible, plan ahead to minimise lengthy breaks between work. Regular, ongoing contracts give lenders more confidence in your earning potential.

When should you start to think about remortgaging?

It is important to be aware of when your initial fixed or tracker rate is set to come to an end so that you know when to look around at the market and see what sort of rates are available.

Your mortgage lender will generally write to you a few months before you move onto the standard variable rate to warn you that your rate could increase and invite you to consider remortgaging.

It usually takes between four to eight weeks to complete the remortgaging process, but it can take longer for contractors, so factor this in when looking for a new deal.

What are the typical fees involved?

When you are switching deals, several fees could apply depending on the circumstances around the change of mortgage.

If you switch deals during the initial fixed or tracker period, then you will likely have to pay an Early Repayment Charge (ERC).

The ERC is calculated as a percentage of the outstanding debt and can be quite significant if you are still in the early stages of your current mortgage.

Most lenders will also charge an Exit Fee to cover the administration cost of closing the account.

There may also be a cost involved with opening the new mortgage. This is in the form of an Arrangement Fee and can be added to the mortgage balance, but by doing so means you will pay interest on it, so it will cost you more in the long run.

Every homeowner has a different set of circumstances, so what is right for you may not be right for your next-door neighbour or your friend on the other side of town.

That’s why seeking independent advice tailored to your unique situation is essential.

We understand that many of our clients will need advice on the subject of contractor mortgages and we can recommend you to a quality firm providing professional mortgage advice that you can trust and who will work hard to find the best solution for you whatever your particular requirements.

We have developed a close relationship with Windfall Finance so that you can draw on their experience and expertise to meet all of your mortgage needs.

Please contact Jeremy – jeremy@cogentaccountants.co.uk  – for further details. You may receive preferential rates from Windfall Finance if you are a client of Cogent.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Financial advice given by Windfall Finance is regulated and authorised by the Financial Conduct Authority.

We recently sent out our 2024-25 tax questionnaires and if you would like Cogent to prepare and file your 2024-25 tax return, please send us your completed Self-Assessment Tax Return Questionnaire.

If you have a second shareholder, they may also need to file a tax return, even if they haven’t previously. For further advice, please contact our Tax Department.

The standard charge including VAT for a basic tax return is £250. Questionnaires received by 30 September 2025 will receive the full discount on a basic tax return, charged at £95.

If your questionnaire is received between 1 October and 31 December 2025, the fee will be discounted to £130; any returns received after 31 December 2025 will be charged at the full rate of £250.

Please note, that more complicated tax returns where additional work or supplements are required, will be subject to additional charges.

Our deadlines have been set so that we can complete your return in time to meet the HM Revenue & Customs’ (HMRC) online filing deadline of 31 January 2026.

If you have any queries or haven’t received the questionnaire, please contact our tax department by emailing tax@cogentaccountants.co.uk

Please return your completed questionnaire together with any attachments by email to our Tax Department – tax@cogentaccountants.co.uk

If you’re a business owner looking to keep your financial house in order, one of the smartest things you can do is make use of tax-efficient investments.

The UK offers a few tidy little wrappers that not only make your money work harder but also keep HMRC’s fingers out of your biscuit tin for a bit longer.

Let’s take a tour through your tax-year toolkit – ISAs, EIS, and VCTs.

Individual Savings Accounts (ISAs): The tidy drawer everyone should have

Think of ISAs as the sock drawer of investing. They’re not flashy, but they’re essential. Every adult in the UK gets an ISA allowance (£20,000 for the 2025/26 tax year), and anything you put inside it can grow free of Income Tax and Capital Gains Tax.

There are four types of ISA:

• Cash ISAs
• Stocks & Shares ISAs
• Lifetime ISAs
• Innovative Finance ISAs

For most business owners looking to build long-term wealth, Stocks & Shares ISAs are normally the go-to as they offer the best returns but come with a higher degree of risk.

They let you invest in shares, funds, and bonds while keeping tax at bay.

If you are looking to save for your future retirement or a house purchase, then a Lifetime ISA (or LISA) could also be a useful route.

A Lifetime ISA offers a 25 per cent Government bonus on contributions to help buy a first home or save for retirement.

Available to those aged 18 to 39, you can contribute up to £4,000 per tax year up to the age of 50 and receive up to £1,000 in bonuses.

Funds can be withdrawn tax-free to buy a home worth up to £450,000 or for any purpose from age 60.

Enterprise Investment Scheme (EIS): For the adventurous declutterer

EIS is like turning your loft into a startup incubator. You invest in early-stage businesses, and, in return, the Government gives you some rather generous perks:

• 30 per cent Income Tax relief on investments up to £1 million per tax year (or £2 million if investing in knowledge-intensive companies)
• Capital Gains Tax deferral on gains reinvested into EIS
• No CGT on gains from the EIS shares after three years
• Loss relief if things go south—because sometimes the loft collapses

It’s higher risk, sure, but potentially high reward—and incredibly efficient for trimming down your tax bill.

Top tip: Make EIS investments early in the tax year to maximise the holding period benefits (and reduce your last-minute stress in April).

Venture Capital Trusts (VCTs): The stylish storage boxes

If EIS is like storing things in the loft, VCTs are more like popping them in stylish under-bed storage—accessible, but still out of the way. With VCTs, you invest in a trust that spreads your money across several early-stage businesses, so the risk is shared.

Here’s the good stuff:

• 30 per cent Income Tax relief on investments up to £200,000 per tax year
• Tax-free dividends
• No CGT on any gains from selling your VCT shares

It’s a little more hands-off than EIS but still brings strong tax advantages.

Top tip: Reinvest VCT dividends to benefit from compounding, especially if you’re not drawing income yet.

Stay on top of your finances

Making the most of these tax wrappers isn’t about throwing money at them last-minute. It’s about routine maintenance.

Like hoovering behind the sofa or organising the shed, financial housekeeping is best done little and often.

Here’s your annual checklist:

• Maximise your ISA allowance early in the year to give investments more time to grow
• Review your appetite for risk: EIS and VCTs can be brilliant, but they’re not for everyone
• Speak to a financial adviser before investing, some structures can be complex, and timing is everything
• Keep good records (especially with EIS/VCT forms), as you’ll need these to claim reliefs

Good financial housekeeping doesn’t just make your life neater. It helps protect your wealth, reduce tax, and set your business and personal finances on a stronger footing.

Many of our clients will need advice on financial housekeeping and we can recommend you to a firm of Independent Financial Advisers to help you maximise tax efficiencies.

We have developed a close relationship with Finli so that you can draw on their experience and expertise to work together to understand and meet your financial goals.

Please contact Jeremy – jeremy@cogentaccountants.co.uk – for further details.

Your capital is at risk. The value of investments can go down as well as up in value and you may get back less than you invested.

Financial advice given by Finli is regulated and authorised by the Financial Conduct Authority.

From 6 April 2025, approximately 14,000 medium-sized firms will be reclassified as small businesses due to changes in company size thresholds.

This reclassification means that these businesses will no longer be responsible for managing the off-payroll working rules, with IR35 compliance shifting back to limited company contractors.

For contractors, this marks a return to the pre-2021 IR35 rules, where they are responsible for determining their own IR35 status and bear the tax liability.

For smaller businesses, this change removes an administrative burden that has often led to overly cautious determinations, pushing contractors into umbrella companies or ‘inside IR35’ engagements.

As a result, many smaller firms may now be more open to engaging limited company contractors outside IR35, given that the tax liability is no longer on them.

What are the new company size thresholds?

The new thresholds, effective from 6 April 2025, are as follows:

A business is classified based on meeting at least two out of the above three criteria.

What does this mean for smaller firms engaging contractors?

With the reclassification, many businesses that previously had to determine IR35 status and take on tax liability for incorrect assessments will now be relieved of this responsibility.

This could lead to a change in how smaller firms engage with contractors, as they will no longer be deterred by the compliance risk associated with IR35.

Many of these businesses are likely to become more open to engaging limited company contractors outside IR35, given that the financial risk is now entirely with the contractor.

For limited company contractors, this presents a potential increase in opportunities to work outside IR35, as businesses previously reluctant to engage them may now be more open to doing so.

How will we help you with these changes?

With IR35 liability switching back to contractors, ensuring compliance is more important than ever.

We will be working with our clients to carry out full IR35 assessments where applicable to ensure that contractors and businesses are correctly classifying engagements.

If a business now classed as ‘small’ wishes to engage limited company contractors outside IR35, we will ensure compliance checks are in place to safeguard you from any potential tax liabilities or risks.

For contractors, the changes offer the potential for increased flexibility and the ability to work outside IR35 again.

We will be working closely with our clients to ensure that any engagement outside IR35 is properly assessed and compliant, mitigating risks for all parties involved.

If you need advice on IR35 assessments or the upcoming changes, contact our Admin team – admin@cogentaccountants.co.uk –  about how we can support your business.

HM Revenue & Customs (HMRC) has never been known for its speed and efficiency, but recent reports show its service levels have hit rock bottom.

The latest Public Accounts Committee (PAC) findings reveal a worsening crisis, with businesses, accountants, and taxpayers alike facing ever-growing frustration when trying to get the answers they need.

The problem – Long waits, dead ends, and no accountability

The numbers speak for themselves. From April 2023 to April 2024, HMRC only managed to answer around two-thirds of customer calls, a record low.

Waiting times now average 23 minutes, with some unfortunate callers spending over an hour on hold, only to be cut off.

This is an unacceptable failure in a system that businesses and individuals rely on to meet their legal obligations.

Tax compliance should not feel like a battle against an organisation that seems increasingly unreachable.

A failing system

The PAC report outlines several alarming trends:

• Unanswered calls – A third of taxpayers who call HMRC never even get through.
• Excessive waiting times – An average wait of 23 minutes means many people lose valuable work hours trying to speak to someone.
• Increased reliance on outdated systems – Despite years of promises about digitisation, HMRC still processes millions of paper documents, leading to slow responses and lost paperwork.
• No clear transparency – The PAC has urged HMRC to reinstate a call waiting time target, but so far, little has changed.

The consequences of HMRC’s inefficiencies

This breakdown in service has wide-reaching consequences:

• Taxpayers struggling to get basic queries answered are left guessing, increasing the risk of mistakes and penalties.
• Businesses facing compliance deadlines cannot afford to waste hours chasing HMRC for simple clarifications.
• Accountants and tax professionals, who are supposed to act as a bridge between taxpayers and HMRC, are met with the same delays and inefficiencies, making their jobs harder.

A service in crisis

The Government claims HMRC is improving its digital services to reduce the burden on phone lines, but this does not solve the underlying issue: a tax authority that is failing in its most basic function of serving taxpayers.

Until HMRC addresses these systemic problems, expect more delays, more frustration, and a system that feels increasingly unfit for purpose.

For contractors, navigating the IR35 legislation and choosing the right way to operate can be challenging.

Many contractors, faced with roles that fall inside IR35, turn to umbrella companies to continue working. However, this is often far from the best solution.

While umbrella companies promise convenience, the reality is they can erode your earnings, reduce financial control, and expose you to unnecessary risks.

If you want to maximise your income, securing an outside IR35 contract and operating through your own limited company remains the best option.

Why umbrella companies aren’t as good as they seem

At first glance, umbrella companies appear to offer a hassle-free way to contract – they handle tax deductions and payroll.

However, the downsides often outweigh any convenience.

Reduced take-home pay

When you work under an umbrella company, you are effectively an employee, but without the benefits of full employment. The umbrella company deducts PAYE tax, employer and employee National Insurance Contributions (NICs), and their own fees before you receive your income.

A contractor operating through an umbrella typically takes home 20–30 per cent less than one working through a limited company in an outside IR35 role. Over a year, this could mean losing tens of thousands of pounds in unnecessary deductions.

Less control over tax planning

Unlike running your own limited company, where you can pay yourself via a mix of salary and dividends to optimise tax efficiency, umbrella companies operate on a strict PAYE model. This means you have no flexibility over how your income is taxed, resulting in higher deductions.

Lack of financial security

Not all umbrella companies are compliant, and many have been caught mismanaging contractor funds or engaging in questionable practices. If an umbrella company collapses, contractors lose unpaid earnings, and in some cases, face liability for unpaid tax and holiday pay.

Why securing an outside IR35 role is the best option

The best way to protect your income and maintain control over your finances is to secure a contract that falls outside IR35.

This allows you to operate through your own limited company, benefiting from:

• Higher take-home pay – Keeping a larger share of your income compared to an umbrella company.
• Tax efficiency – The ability to structure your income using a mix of salary and dividends.
• Control over your business – Retaining decision-making power rather than handing it over to an umbrella.
• Limited liability protection – A safeguard against personal financial risk.

Don’t let an umbrella company hold you back

Umbrella companies limit your earning potential and reduce tax efficiency.

However, if you are serious about maximising your income, securing an outside IR35 role and operating through a limited company is the way forward.

With the Self-Assessment deadline now behind us, contractors should remain extra vigilant against phishing scams and fines.

HM Revenue & Customs (HMRC) has reported a record-breaking number of Self-Assessment tax returns submitted before the 31 January deadline, with over 11.5 million taxpayers managing to file on time.

However, for many, this came as a last-minute scramble, with nearly 780,000 submissions made on deadline day alone.

Some 33,000 taxpayers left it until the final frantic hour between 11 pm and midnight, while the busiest period was between 4 pm and 5 pm, when 61,549 returns were submitted just before the end of the working day.

The cost of missing the deadline

Despite the high number of timely submissions, 1.1 million taxpayers missed the cut-off, immediately incurring a £100 fine.

However, this is just the beginning of the penalties for late filers:

• £10 per day after three months, up to a maximum of £900
• A further 5 per cent of the tax due or £300 after six months, whichever is greater
• An additional 5 per cent of the tax due or £300 after 12 months

Separate late payment penalties and interest charges will also apply for unpaid tax bills. With HMRC expected to collect at least £110 million in fines, the cost of missing the deadline can quickly escalate.

The rise of phishing scams

Every year, HMRC sees a spike in fraudulent activity following the 31 January deadline as scammers attempt to exploit taxpayers who are expecting tax refunds or fear penalties for late filing.

Fraudsters are becoming increasingly sophisticated, making it crucial to recognise the warning signs and protect yourself from potential financial loss.

How do phishing scams work?

Phishing scams typically involve emails, text messages, or phone calls that claim to be from HMRC.

They often:

• Promise a tax refund and request personal or bank details.
• Demand immediate payment for an “unpaid tax bill” to avoid legal action.
• Ask for HMRC login credentials under the pretence of verifying information.
• Contain links to fake HMRC websites that look legitimate but are designed to steal your information.

HMRC has confirmed that it will never ask for payment details or personal information via email or text.

If you receive a message that seems suspicious, do not respond, click any links, or provide any details.

Stay secure and stay informed

Fraudsters are becoming increasingly sophisticated, but by staying alert and following best practices, you can protect yourself from phishing scams. If you’re ever unsure about a tax-related message, consult us before taking any action.