The Government faced a difficult job going into the Autumn Budget, as they navigate a growing national deficit, a seemingly never-ending cost-of-living crisis and political challenges.

From the outset, the Chancellor Rachel Reeves made it clear that this would be an Autumn Budget that focused on fairness, with everyone playing their part in reducing national debt and funding spending on the people in society who need help the most.

Unsurprisingly, this means an increase in taxation across a number of areas, not least the substantial decision to freeze personal tax rates for a further three years.

Against a wide backdrop of inflation above the Bank of England’s two per cent target and rising interest payments for the public purse, the Chancellor also made it clear that higher earners and those with more wealth would be expected to pay more.

At the head of these taxes on wealth is the decision to introduce a ‘mansion tax’, a higher rate of tax on income from dividends, property and savings and a new cap on tax relief to salary sacrifice pension schemes.

Whilst personal tax focused heavily within the Autumn Budget, businesses didn’t entirely escape the net, as Reeves introduced reductions to the writing down capital allowance and a cut to the Capital Gains Tax relief on Employee Ownership Trusts.

However, the biggest sting in the tail for many businesses was the additional burden of higher employment costs, as the Government increases the National Living and National Minimum Wage once again.

Having faced endless jibes from the opposition, Reeves closed her latest speech with a focus on helping those in society and delivering support that would boost growth, reduce inflation and assist with the cost of living.

• Economy and deficit
• Personal tax freeze
• Business tax
• Tax on wealth
• Electric cars and transport
• Spending and investment
• Savings and pensions
• Final thoughts

Economy and deficit

A key promise in Labour’s manifesto was to bring stability to the UK economy and reduce the national debt over the course of the current parliament.

Despite a rocky start to her role as Chancellor and the discovery of a larger than expected black hole in the public finances, Reeves rose proudly to announce that her fiscal rules were working, even if it meant additional personal and business tax hikes – the “necessary choices” she announced in her pre-Budget speech.

According to the OBR, UK GDP will grow by 1.5 per cent in 2025, which is 0.5 per cent above the forecast from earlier this year.

However, in future years, the outlook is less positive. In 2026 the economy is expected to continue to grow by 1.4 per cent, but this is below the previous forecast of 1.9 per cent.

Similarly in 2027, growth will only reach 1.6 per cent, which is 0.2 per cent behind the previous estimate. This trend of slower growth continues through to the end of the current forecast period in 2029.

Despite this slowdown, the Government will reduce its deficit over the next two years and will eventually enter surplus by the 2027/28 tax year. This surplus will continue to grow to £24.6 billion by 2030/31.

The Chancellor was pleased that her decision to increase taxes has more than doubled her headroom to keep within her fiscal rule to balance the budget, from £9.9 billion to around £22 billion.

However, before the Government gets to this point, tough decisions need to be made including a variety of tax hikes in the years ahead.

Personal tax freeze

The biggest and possibly furthest reaching announcement in the Autumn Budget is the Government’s decision to freeze personal tax thresholds until April 2031 – extending the current freeze for another three years.

Whilst politically this means that Labour avoids breaking its manifesto pledge to not raise personal tax rates, the reality is that this change is a tax rise in all but name.

This change will affect income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals. Digging deeper into the Chancellor’s red book, it will also extend the freeze on Inheritance Tax (IHT) rates for a further year, April 2030 to April 2031.

Deciding to freeze the income tax thresholds is expected to bring in around £8 billion to the treasury, but it will also drag nearly one million more people into paying tax and force hundreds of thousands of taxpayers into higher tax bands due to fiscal drag.

If there was some consolation it was to those already worried about the upcoming reform to Agricultural Property Relief (APR) and Business Property Relief (BPR) from April 2026.

During her speech, the Chancellor confirmed that any unused £1 million allowance for the 100 per cent rate of APR and BPR will be transferable between spouses and civil partners. This includes if the first death was before 6 April 2026.

Acknowledging the costs that this would add to the lives of working people, Reeves did commit to driving energy bills down by axing the ECO scheme. This will cut average household bills by £150 each year.

Business tax

Following on from substantial changes in the previous Budget to business tax, the Chancellor made very few changes to the way organisations will be taxed.

However, she did confirm that from April 2026, the main rate of writing down allowance would be reduced by four percentage points to 14 per cent.

To ensure that businesses weren’t too disadvantaged, a new first-year allowance of 40 per cent for main‑rate assets will be introduced to maintain the Government’s commitment to help businesses invest.

For those looking to exit their company there was another blow, however, as the Government will restrict Capital Gains Tax relief on Employee Ownership Trusts from 100 per cent to 50 per cent.

Although not a tax per se, the biggest change for many businesses will be increases to the National Minimum and National Living Wage.

From 1 April 2026, the rates will increase as follows:

• National Living Wage – £12.71 per hour (up 4.1 per cent)
• National Minimum Wage for 18-20 year olds – £10.85 (up 8.5 per cent)
• National Minimum Wage for 16-17 year olds and apprentices – £8.00 per hour (up 6 per cent)

Tax on wealth

Many expected the Government to tax wealth heavily and whilst there were certainly a number of measures intended to do this and a lot of rhetoric from Reeves and the front benches, the reality fell short of the expectations.

One of the key changes was an increase to income tax against dividends, property and savings.

From April 2026, the ordinary and upper rates of tax on dividend income will increase by 2 percentage points. The additional rate will remain unchanged.

A year later in April 2027, new separate tax rates for property income will be introduced as follows:

• The property basic rate – 22 per cent
• The property higher rate – 42 per cent
• The property additional rate – 47 per cent

The Government will also increase the tax rate on savings across all bands by 2 percentage points in the same year.

In addition to this change, a new High Value Council Tax Surcharge – already dubbed a ‘mansion tax’ – will be introduced for homes worth more than £2 million.

This will equate to an annual charge for properties worth more than £2 million starting at £2,500, rising to £7,500 for properties worth more than £5 million.

Electric cars and transport

The number of electric vehicles on the road has risen rapidly thanks to various incentives, but the Autumn Budget contained considerable changes for this group of road users.

The Chancellor’s speech and accompanying red book sets a clearer long-term framework for electric vehicles, balancing new charges with wider financial support and incentives.

From April 2028, a new Electric Vehicle Excise Duty will introduce a per-mile charge for electric and plug-in hybrid cars, to be paid alongside existing Vehicle Excise Duty.

Electric cars will pay half the fuel duty equivalent (around 3p per mile), while plug-in hybrids will pay half of that rate again. The detailed design is now out for consultation until March 2026.

Alongside this new charge, the Government is expanding support for the sector. An extra £200 million is being invested in charging infrastructure, split between a new local authority fund for residential and workplace chargepoints and a further allocation for home and business charging.

A 10-year business rates exemption will also apply to eligible charging points and electric-only forecourts, reducing costs for operators.

In a significant move for buyers, the threshold for the Vehicle Excise Duty Expensive Car Supplement will rise to £50,000 for zero-emission vehicles.

This will apply to cars registered from April 2025 and will come into effect from April 2026.

The Electric Car Grant is also being strengthened, with an additional £1.3 billion of funding and an extension to 2029-30.

There are updates to company car taxation too. Plans to bring employee car ownership schemes into the Benefit in Kind rules have been delayed until April 2030, with transitional arrangements running until 2031. First-year capital allowances for zero-emission vehicles and charging equipment have been extended to 2027.

Plug-in hybrids will also benefit from a temporary Benefit in Kind tax easement until April 2028, preventing sharp increases as new emissions standards come into force.

For those not ready or able to make the move to zero-emission vehicles, the Government confirmed that the current 5p cut to fuel duty will remain in place up until the beginning of September 2026.

Spending and investment

The tax hikes were offset by spending elsewhere, with the Government committing to an additional £12 billion in the Chancellor’s measures.

One key commitment, as part of its mission to end child poverty, was the removal of the two-child limit in the Universal Credit Child Element from April 2026.

However, its spending focus wasn’t just on social schemes as the Government provided investment to a wide range of schemes.

The Autumn Budget outlines a broad programme of investment aimed at strengthening regional economies, improving infrastructure and accelerating growth across the UK. A series of new funds sits at the heart of this approach.

These include the £30 million Kernow Industrial Growth Fund, designed to back Cornwall’s strengths in critical minerals, renewable energy and marine innovation and a £500 million Mayoral Revolving Growth Fund

This will allow Mayors in key city regions to co-invest with central Government to unlock stalled developments and overcome finance barriers.

A new Local Growth Fund will also provide just over £900 million over four years to a wide group of Mayoral Strategic Authorities, giving each the flexibility to support local infrastructure, business investment, employment initiatives and skills programmes.

Targeted support continues through the Growth Mission Fund, which has already committed funding for projects ranging from a sports quarter in Peterborough to a STEM centre in Darlington.

Investment zones and freeports continue to form part of the wider industrial strategy.

Business cases have now been approved for the Flintshire and Wrexham Investment Zone, Anglesey Freeport and the Forth Green Freeport, with details also confirmed for the Northern Ireland Enhanced Investment Zone.

The Budget also commits record levels of local road maintenance funding, rising to more than £2 billion a year by 2029–30, enabling the Government to exceed its commitment to fix an additional one million potholes annually.

In energy and industrial development, the North Sea Future Plan sets out how the UK will continue supporting investment in domestic oil and gas, while up to £14.5 million will be channelled into industrial projects in Grangemouth to help create jobs.

Other major transport and infrastructure commitments include long-term support for the Docklands Light Railway extension to Thamesmead, funding for the next stage of the Lower Thames Crossing and brownfield remediation in Port Talbot to unlock development linked to the Celtic Freeport.

Savings and Pensions

Long awaited reforms to ISAs were finally delivered by the Chancellor in this Budget.

From 6 April 2027, the annual ISA cash limit will fall to just £12,000, but an overall annual ISA limit of £20,000 will be retained.

This means that the remaining £8,000 allowance will need to be invested in stocks and shares ISA to benefit from the tax-free amount.

In a big mix up to both pensions and tax planning, the Chancellor announced that employer and employee National Insurance contributions will be charged on pension contributions above £2,000 per annum made via salary sacrifice.

This change will take effect from 6 April 2029, closing a window that many high earners have used to minimise their Income Tax liabilities, whilst increasing their lifetime pension savings.

Final thoughts

The Autumn Budget delivered on the expected tax hikes, but the axe didn’t fall in all of the places that had been speculated about.

This was a Budget that focused more on personal taxation, rather than corporate taxation, but many of the measures will affect the employees and leadership of SMEs across the UK.

Labour’s focus is clearly on reducing its deficit, whilst increasing spending in areas that reduce the impact of the cost of living. Whether it will achieve this careful balancing act is yet to be seen, but in the meantime for many of us it will mean paying more across a wide range of taxes.

Those people whose future plans have been affected as a result of this Budget must seek professional advice as soon as they can.

To read the full Autumn Budget document, please click here.

***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 31 December 2025 to benefit 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 31 December 2025 will receive a discount on the basic tax return, charged at £130.

Any questionnaires 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***

Important update – The new Companies House ‘Identity Verification Process’ will launch from 18 November 2025 making it a legal requirement for new and existing Company Directors and Persons with Significant Control (PSCs) to verify their identity over the next 12 month period, as and when their company’s annual Confirmation Statement is due for filing.

The new verification process will help deter those wishing to use companies for illegal purposes.  Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity over the next 12 months in order to prove they are who they claim to be.

We will be writing to clients over the next 12 months before it is time for us to file their company’s annual Confirmation Statement with full details of how to apply to Companies House for their unique filing code.

Once you have received an email from us, you should attend to it without delay. It is also extremely important that you forward the unique filing code to us as soon as it has been received from Companies House as we are unable to file the company’s Confirmation Statement without it and this may incur unnecessary late filing penalties.

We thank you for your co-operation with this.

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.