Running a limited company brings freedom and flexibility, but it also means taking full responsibility for financial planning.

Whether you’re a contractor, consultant or company director, how you take profits and protect your income can make a significant difference to your long-term security.

Many directors rely on dividends and salary while they are working but can neglect their future income needs for when they are retired.

Similarly, directors are often the sole earners in their household and have nothing in place to protect their family and household income if they couldn’t work.

Using the limited company, through a combination of pensions and protection planning, it’s possible to reduce tax, build wealth and provide peace of mind for both you and your family.

Pensions – A smarter way to take profits

Paying into a pension directly from your company is one of the most tax-efficient ways to extract profits:

• Corporation Tax relief – Employer contributions are treated as an allowable business expense, cutting your company’s Corporation Tax bill
• No National Insurance – Unlike salaries, pension contributions aren’t subject to National Insurance
• No Dividend Tax – Pension contributions avoid Dividend Tax, which has steadily increased in recent years
• Tax-free growth – Pension investments grow free from capital gains and Income Tax, helping retirement savings compound faster.

For example, a £60,000 employer pension contribution could save a company £15,000 in Corporation Tax, with no National Insurance or Dividend Tax to pay.

That’s money staying in the business owner’s pocket and working harder for the future.

Reviewing and consolidating pensions

Many business owners will have accumulated multiple pensions from previous roles. Reviewing and consolidating these can help ensure the funds are invested efficiently and aligned with your retirement goals.

For some, particularly those approaching the latter part of their working career, the focus shifts to assessing whether existing arrangements are truly fit for purpose – evaluating efficiency, reducing duplication and considering how pensions can best support income needs in retirement.

Life cover and Income Protection– Protecting your income and your family

While pensions build future wealth, life cover and income protection cover provides protection today.

Contractors and directors don’t always have the same benefits that employees enjoy, so arranging cover through the business can be particularly valuable.

• Life Cover – A lump sum payout on death provides security for loved ones
• Income Protection Cover – A monthly payout if one is unable to work due to injury or illness to ensure there is always money coming into the household
• Business efficiency – Relevant Life Cover and Executive Income Protection can be arranged through the company. Premiums are tax-deductible, with no benefit-in-kind for the employee.
• Tax savings – Compared to paying for personal protection out of post-tax income, company-funded policies can be significantly more cost-effective.

Balancing profit, protection and planning

Good planning for contractors and directors goes beyond immediate profit extraction. It’s about striking the right balance and using pensions to reduce tax and grow wealth for the future, while also putting cover in place to protect what matters most today.

Contact us to see how smart planning can reduce your tax bill today and secure your financial future tomorrow.

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 retirement goals.

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

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

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

As the end of 2025 draws closer, you may be thinking about the next stage of your life and looking ahead to the future.

We are not talking about your new year’s resolution, no, rather we think that contractors should be putting more thought into their retirement plans.

Retirement is always seen as an exciting chapter in your life as you put down the tools and get ready to enjoy all the fruits of your hard work.

However, for many freelancers and contractors it can come with some trepidation. A previous study by the Institute for Fiscal Studies in partnership with the abrdn Financial Fairness Trust, found that only 20 per cent of self-employed workers, including contractors, earning over £10,000 are saving in a private pension. In comparison, 80 per cent of employees earning over £10,000 are saving for their retirement.

Given the poor levels of retirement planning in the contractor community, we think it’s so important to get a plan in place that suit your needs once you are ready to stop working.

Build your retirement savings and pension pots

We know this is easier said than done but setting aside funds where you can will give you the best opportunity of having a healthy retirement pot.

Unlike regular employees, you are not required to submit money into a workplace pension, which for some may be part of the attraction of contracting, but putting nothing away risks you having less in old age and may force you to work longer.

Instead, seek independent financial advice and explore the market to find the best deals.

Try to start saving as soon as you can because different providers may have different deals and rates to offer you, plus your pension pot will then benefit from the impact of compounding interest.

It will help you understand the type of savings or pension options available to you, such as a self-invested pension plan (SIPP), which allows you to deposit flexible amounts of money based on your earnings.

Organising your expenditure

Once you decide to retire, your income from working will stop, meaning you will need to look at your outgoing payments.

This may include your everyday living costs like shopping, petrol and the occasional sweet treat.

However, this also includes potential mortgage payments and house bills, so it’s a good idea to have a clear picture of your outgoings and spot ways you could save money.

A recent study by the Pensions and Lifetime Savings Association (PLSA) found that, for an individual, they would currently require £1,117 per month for a minimum living standard and £3,658 for a comfortable lifestyle. This would mean building up a pension pot of around £540,000, to £800,000.

Understand your own financial needs and business plans

Retirement is all about you. It is your time to relax and enjoy doing whatever you please.

It’s important you understand your own finances before deciding if the time is right to retire. You may choose to set a financial target that you can live off when putting your plans in place.

Planning is the key to enjoying your retirement

You want to enjoy the next chapter of your life and planning ahead gives you the best opportunity to do so.

Whether that is holidays with your family, starting a new hobby or ticking things off your bucket list, a successful retirement plan can help those dreams become a reality.

A successful retirement plan allows you to do whatever you want without the unwanted worry about your finances.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE***

If you would like Cogent to prepare and file your 2024/25 tax return and you have not yet sent us your completed Self-Assessment Tax Return Questionnaire, you will need to do so by 30 September 2025 to benefit fully from our discounted fee.

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.

Penalties for late filing of tax returns can be as much as £1,600, even when there is no tax due, so please ensure your tax return is filed on time, whether you ask us to prepare it for you, or you have made other arrangements.

You can request a questionnaire for 2024/25 by emailing tax@cogentaccountants.co.uk

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

You are required to file a tax return if:

• You have been asked to file one by HMRC
• You have a tax liability for the year (e.g. additional and higher rate tax, student loan repayments, high-income child benefit charge or if you have any income which has not been taxed at source)
• You have a new source of income that needs to be declared.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE***

The kids are back at school, the summer holidays feel like they are long behind us and life is slowly returning to its usual routine.

September always feels like a bit of a reset, a chance to get back into the swing of things after (hopefully) sunning ourselves on a beach or by the pool.

For contractors and freelancers, it’s also a great moment in the year to pause, take stock and get set for a strong finish to the year.

Check in on your contracts

Take a quick look at your current agreements. Are your rates where they should be? Do the terms still work for you?

A little review now can save you headaches later and might even open the door to better deals going forward.

If nothing else, it may help you understand what you are looking for in your next contract, as and when it arises.

See what work is coming in

Autumn tends to be a busy time as projects kick off after the summer lull. Have a look at your pipeline and see if there is enough coming.

If not, it may be the perfect time to start to reconnect with former clients and let your network know when you’re next available for work.

Marketing yourself well ahead of the end of a contract should ensure that there aren’t any gaps in employment, if that is what you want.

Shout about yourself

When was the last time you refreshed your LinkedIn (be honest). As people come back to work, they tend to spend more time on their social media accounts as they attempt to avoid having to deal with their role.

Now is a great time to share some recent wins and remind people what you do best. What’s more, you may get ahead of the competition, as many freelancers wait for the normal “new year, new job” posts in January.

Plan for what’s next

Think about how you want the rest of the year to look. Set aside time for a bit of financial planning, make sure you’re on top of your tax position and start thinking ahead to 2026.

With a Budget just around the corner in November, taking this time now to consider its potential impact on your finances and how you operate wouldn’t hurt, even if we don’t know the details of the Chancellor’s speech just yet.

Coming back after summer isn’t just about catching up, it’s about getting ahead. By checking in on your contracts, promoting yourself and doing some simple planning you can put yourself in a great position to end the year on a high.

If your company has retained profits and you have no immediate plans to use them, investing in a high-interest account or company bond is a great way to boost your funds.

High-interest rate accounts

Higher interest rate accounts enable you to earn more from your retained profits than would be possible from a regular business current or savings account.

However, in return for higher interest on your cash, you will typically need to leave your funds untouched in the account or bond for a set period.

As a rule, the longer the period, the more interest you’ll be able to earn. If you end up withdrawing the money early, you will likely face substantial penalties.

That’s why you need to consider how much of your retained profits you can safely invest in a fixed higher interest rate savings account.

Advice for contractors

As a contractor, you face periods of uncertainty. If you may need all your retained profits to keep your business afloat through tougher financial periods, tying up your funds in a fixed account could lead to further issues and higher costs down the line.

That’s why you must make sure that you set enough funds aside that are easily accessible to you before transferring any retained profits into a high-interest rate account.

If you’re planning your exit strategy, accumulating retained profits in a high-interest rate account can be an effective way of reducing your tax liability upon distribution of the company’s capital.

In any event, you should always seek independent financial advice before you make any significant investment decisions.

We have a wealth of experience in advising contractors just like you on the best use of their retained profits and can refer you to independent financial advisers who can help. If you’re struggling to work out what’s best for your business, speak to us.

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.