Director Tax, How to Calculate for 2026–27 (And Why Most People Get It Wrong)

Posted on February 10, 2026 by Sarah

Director tax isn’t about one number. It’s about interaction.

Salary affects:

Corporation Tax
Employer’s National Insurance
Personal allowances

Dividends affect:

Personal tax bands
Dividend allowance erosion
Effective marginal tax rates

Then layer in frozen thresholds, reduced allowances, and Corporation Tax bands, and suddenly “just take dividends” becomes terrible advice.

This is exactly why generic calculators fail. Director tax isn’t linear. It’s conditional.

A proper calculation needs to consider:

Optimal salary level
Dividend mix
Company profit
Personal circumstances

That’s why I built a salary or dividends calculator specifically for 2026–27. Not to replace advice, but to show the real numbers. It’s free and you can download it here.

If you don’t understand how your tax is calculated, you’re not planning, you’re guessing.

If you would like to discuss more about your tax planning please contact us at The Accountancy Office and we will be happy to help.

Using Your Home Address as Your Company’s Registered Office, What You Should Know

Posted on February 4, 2026 by Sarah

Using your home address as your company’s registered office is common, especially when a limited company is new. It’s legal, simple, and often feels like the obvious default.

But it’s also one of those decisions that quietly follows you around for years if you don’t understand the implications properly.

This blog explains:

What a registered office actually is
The pros and cons of using your home address
The exact steps and forms involved
How to reduce or remove your home address from public records (where possible)

What is a registered office address?

A registered office is your company’s official legal address.

It’s the address used by:

Companies House
HM Revenue & Customs
Courts and other statutory bodies

It must:

Be a physical UK address
Be in the same jurisdiction as your company
Be an address where official post can be reliably received

This is not just admin. This is where legal responsibility lives.

Can you use your home address as a registered office?

Yes. It is completely legal.

Many directors do this when:

The business is new
They work from home
There is no separate office

But “legal” does not mean “neutral”.

The downsides directors usually discover too late

1. Your home address becomes public

Anyone can search your company and see the registered office address. That includes clients, suppliers, marketers, and anyone else with internet access.

2. It becomes part of the company’s filing history

Even if you change the registered office later, older documents may still show your home address.

3. All statutory post goes there

Companies House reminders, HMRC notices, and legal correspondence are all sent to the registered office. Missing a letter does not pause a deadline.

4. It can affect perception

For some businesses, a residential address does not align with the professional image they want to present.

None of this means using your home address is wrong. It means the decision should be intentional.

How to use your home address as a registered office.

New companies

When incorporating, you enter the registered office address during the formation process. No separate form is required.

Once incorporated, the address appears on the public register immediately.

Existing companies

If your company already exists and you want to change the registered office to your home address, you must file:

Form AD01 – Change of registered office address

This:

Is free
Can be filed online
Takes effect only once registered by Companies House

This change applies from that point onward only.

Updating HMRC

Changing your registered office with Companies House does not automatically update HMRC.

You must separately update:

Corporation Tax correspondence address
PAYE address (if applicable)
VAT correspondence address (if VAT registered)

If HMRC sends post to an old address, penalties still apply even if you never received the letter.

Can you remove your home address from the Companies House register?

This is where advice often goes wrong.

If your home address is the current registered office

You cannot remove it from the public register.

A registered office address must always be visible. If it is residential, it remains visible while it is in use.

If your home address was previously used as a registered office

Historically, this address could not be removed from historical documents.

However, under new measures introduced by the Economic Crime and Corporate Transparency Act 2023, individuals can now apply to have a residential address suppressed from certain historical documents, even where it appeared as a registered office address, in most instances.

Important limitations:

Suppression is not automatic
Applications are document-specific
Not all documents will qualify
Some historical visibility may still remain
Evidence may be required in certain cases

This is a suppression, not a guaranteed wipe.

Removing your home address where it appears as a personal detail

Where your home address appears as a personal detail (for example on director or PSC filings), you can apply for removal using:

Form SR01 – Application to remove personal details from the register

Key points:

You must list each document separately
The cost is £30 per document
Approval is not guaranteed

SR01 does not remove the fact that an address was once a registered office, but it can reduce personal exposure elsewhere.

What actually works in practice

If privacy matters to you:

Change the registered office to a non-residential address as soon as possible
Update HMRC separately
Review historic filings
Apply for suppression selectively where appropriate
Assume some historical visibility may remain

Should you use your home address as a registered office?

It can be fine if:

You’re comfortable with public visibility
You reliably receive post
You understand the long-term implications

It’s often not ideal if:

Privacy matters
You plan to scale or sell
You want a clear separation between home and business

Final thought

Your registered office is not just an address. It is a permanent marker in your company’s public history.

You can change it. You can sometimes suppress parts of the past. You cannot assume it will ever disappear completely.

Choose it like someone running a company, not someone filling in a form in a rush.

If you would like to explore this more please contact us at The Accountancy Office to make an appointment and we will be happy to discuss this with you.

The Construction Industry Scheme (CIS): What It Is, How It Works, and Why Getting It Wrong Is Expensive

Posted on January 21, 2026 by Sarah

The Construction Industry Scheme (CIS) is one of the most misunderstood areas of UK tax. It sits awkwardly between payroll, self-employment, VAT and corporation tax. It catches out contractors and subcontractors every single year.

If you operate in the construction industry, whether as a sole trader, limited company, contractor, or subcontractor, CIS is not optional. It is a core compliance obligation with real cash flow and tax consequences.

This guide explains what CIS is, who it applies to, how deductions work, and why specialist support matters, particularly in construction where margins are tight and admin errors are costly.

What Is the Construction Industry Scheme (CIS)?

The Construction Industry Scheme is a tax deduction scheme operated by HM Revenue & Customs.

Under CIS, contractors are required to deduct tax from payments made to subcontractors for construction work and pay this tax directly to HMRC.

These deductions are effectively advance payments towards the subcontractor’s tax bill.

CIS applies to most construction work carried out in the UK, including:

General building and construction
Alterations, repairs, and decorating
Civil engineering
Groundworks and demolition
Installation of systems such as heating, lighting, and power

Who CIS Applies To

CIS affects both sides of the construction supply chain.

Contractors

You are a contractor if you:

Pay subcontractors for construction work, or
Spend more than £3 million on construction over a rolling 12-month period (even if construction is not your main trade)

Contractors must:

Register for CIS
Verify subcontractors
Deduct tax where required
Submit monthly CIS returns
Pay deductions to HMRC on time

Subcontractors

You are a subcontractor if you:

Carry out construction work for a contractor

Subcontractors can be:

Sole traders
Partnerships
Limited companies

Subcontractors may have tax deducted at:

20% (registered)
30% (not registered)
0% (gross payment status)

How CIS Deductions Work

CIS deductions are taken from the labour element only, not from materials, VAT, or certain qualifying costs.

For example:

Labour: £1,000
Materials: £300
CIS deduction at 20%: £200
Net payment received: £1,100 (plus VAT if applicable)

For subcontractors, these deductions are not an extra tax, but they must be correctly claimed or offset later.

This is where things often fall apart.

Why CIS Causes Problems (Even for Established Businesses)

CIS issues are rarely about ignorance. They are usually about poor systems.

Common problems we see include:

Incorrect labour vs materials split
CIS deducted but never reclaimed
CIS suffered not reflected correctly in accounts
PAYE and CIS treated as separate silos
Limited companies missing CIS set-offs against Corporation Tax
Contractors filing late or inaccurate CIS returns
Cash flow pressure caused by excessive deductions

Once CIS errors stack up, they don’t quietly resolve themselves. They compound.

CIS for Limited Companies (Often Overlooked)

CIS does not just affect sole traders.

If your construction business operates through a limited company:

CIS deductions suffered can be offset against PAYE, NIC, and Corporation Tax
Timing matters, particularly around year end
Incorrect treatment can distort profitability and cash flow reporting

This is where generalist accounting falls short.

Why Construction Needs Specialist Accounting Support

Construction is not just “another sector”. It has:

CIS
VAT complications
Irregular cash flow
Retentions
Project-based profitability
High compliance risk

Trying to bolt CIS onto a generic bookkeeping setup usually ends badly.

That is why we operate a dedicated construction finance function alongside our main practice, Construction Tax & Finance

Our Specialist Construction Service

At The Accountancy Office, we support construction businesses through our in-house specialist service, Construction Tax & Finance (CTF).

CTF exists for one reason, to handle the complexity of construction properly, not as an afterthought.

Our construction clients receive:

CIS registration and verification
Monthly CIS returns and compliance
Accurate CIS deductions and set-offs
Bookkeeping structured for construction realities
VAT support tailored to construction schemes
Cash flow visibility and forecasting
Year-end accounts that actually reflect the business
Ongoing tax planning, not reactive fixes

Dividends-More Big Changes for Directors, Detailed Reporting on Dividends from 2025/26

Posted on October 29, 2025November 12, 2025 by Sarah

Dividend Changes-If you’re a director-shareholder of a limited company, read on – your 2025/26 tax return will be more detailed than ever.

From 6 April 2025, HMRC is introducing new reporting requirements for individuals receiving dividends from “close companies” (typically, limited companies controlled by five or fewer people or directors). These changes are aimed at increasing transparency – and yes, there are penalties if you get it wrong.

What’s changing?

If you receive dividends from a company you’re a director of, you’ll need to disclose more information on your self-assessment tax return for 2025/26. Specifically:

Whether you were a director of the company
Whether it was a close company
The name and registered number of that company
The amount of dividends you received (even if that figure is £0)
The highest percentage shareholding you held in that company during the year

Previously, you could simply report dividend income as a single total. Now, you must break it down company-by-company, even if you own multiple entities or your shareholding changed during the year.

Why the change?

HMRC says this is about transparency. Dividend payments made to directors of close companies are often tricky to track, especially when they’re lumped in with other investment income. The new requirements aim to close that gap – and help HMRC identify mismatches between what a company declares and what a director receives.

Will there be penalties?

Yes. A £60 penalty can apply for each failure to provide the required information. So if you leave off the company number or forget to mention your highest shareholding percentage — that could trigger a fine.

What you need to do now:

Don’t wait until January 2027 to start thinking about this. You should:

Start recording dividend payments from each company separately
Keep notes of your shareholding % throughout the year (and the highest point)
Make sure you have the correct company registration numbers handy
Let your accountant know that this info will be needed when preparing your next return

If you operate a limited company and pay yourself via dividends, this absolutely applies to you.

Please contact us if you’d like to discuss your Dividend payments then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

AI vs Accountant

Posted on August 21, 2025November 12, 2025 by Sarah

AI vs Accountant: Why Professional Advice Matters When Deciding Between a Sole Trader and a Limited Company

Artificial intelligence (AI) tools can crunch numbers in an instant, but they can’t replace the judgement of a chartered accountant—especially when it comes to choosing the right business structure.

In two recent LinkedIn posts I shared a real example from my practice: an enquiry from Jane, a soletrader making around £60,000 profit. She was wondering if she should incorporate to save tax. I fed the same numbers into an AI calculator and discovered a series of mistakes. This blog summarises what happened, sets the record straight with the latest tax rules and shows why relying solely on AI can cost you.

Jane’s Question: Should I Go Limited?

Jane’s friend said that she would “save tax by going limited”. On the face of it, the idea sounds plausible. After all, corporation tax on profits up to £50,000 is 19%, which is lower than the 2045 % bands for personal income tax. Limited companies also separate personal liability from business debt and often allow more flexibility to raise finance or share profits within a family.

Tax rules change constantly, and several factors can tip the scales. To illustrate this, I ran the numbers for Jane twice: once manually and once through an AI calculator. Here’s what I found.

How AI Got the Numbers Wrong

When I asked the AI tool to work out Jane’s tax bill as a sole trader versus a limited company for the 2025/26 tax year, it provided a neat set of figures—but they weren’t correct. The mistakes stemmed from using outdated thresholds and misunderstanding how different taxes and expenses work. Below are some highlights (or lowlights):

Employer’s National Insurance (NIC) threshold – The AI used the old £9,100 annual secondary threshold. From April 2025, employers start paying NIC at a much lower £5,000 threshold .
Employer’s NIC rate – It applied the historic 13.8 % rate instead of the current 15 % rate on earnings above the secondary threshold .
Accountancy fees as a posttax deduction – The calculator treated accountancy fees as an aftertax personal expense. In reality, they’re deductible business expenses that reduce taxable profit .
Class 4 National Insurance – It assumed a flat 6 % NIC on all profits over £12,570. For 2025/26, selfemployed people pay 6 % NIC only up to £50,270; profits above this are charged at 2 % .
Class 2 National Insurance – The tool still added Class 2 NIC. From April 2024, Class 2 NIC is no longer payable for selfemployed people with profits above the Lower Profits Limit .
Overall outcome – Most importantly, the AI concluded that incorporating would save Jane money. When I corrected the numbers using current rates and allowed for accountancy fees correctly, the result flipped: as a limited company director with a typical mix of salary and dividends, Jane would actually keep around £352 less than she would as a sole trader.
The AI’s calculation looked plausible but ignored the subtle changes to National Insurance thresholds and rates and mistreated expenses. It only came close to the right answer when I challenged it with followup questions.

A Reality Check: Sole Trader vs Limited Company at £60,000 Profit

Comparing Jane’s situation under both structures using the latest 2025/26 rates:

Item	Sole Trader	Limited Company
Profit before tax	£60,000	£60,000
Deductible accountancy fees	Deducted from profit before tax	Deducted from company profits
Taxes & NIC	Income tax at personal rates + Class 4 NIC (6 % to £50,270; 2 % thereafter)	Corporation tax at 19 % on profits; salary subject to employer NIC at 15 % and employee NIC; dividends taxed at lower rates
Net amount retained	≈ £45,705	≈ £45,353

The table shows that, at this profit level, there’s no immediate tax advantage in forming a limited company. The savings from the lower corporationtax rate are largely wiped out by higher employer NIC, administrative costs and the correct treatment of accountancy fees.

Beyond Tax: Other Factors to Consider

Tax isn’t the only consideration. Here are some other factors Jane (and anyone in a similar position) should weigh up:

Liability – A limited company is a separate legal entity, so you’re personally liable only for the amount you’ve invested . Sole traders are personally responsible for their business debts.
Funding and ownership – Companies can raise capital more easily by issuing shares and may attract investors . Sole traders rely on personal or business loans.
Administrative burden – Companies must submit annual accounts and corporationtax returns from the first pound of profit . Sole traders have a simpler selfassessment and can use cashbasis accounting .
Flexibility in sharing profits – Companies can distribute profits as dividends to shareholders, including family members, potentially reducing the family’s overall tax bill .
Future plans – For owners expecting to earn significantly more in future or raise external finance, incorporating might deliver longterm savings and growth opportunities despite higher shortterm costs.

Conclusion: Why You Still Need Professional Advice

AI tools can provide ballpark figures, but they often lag behind when tax rules change or when they’re required to interpret realworld complexities. In Jane’s case, an AI calculator not only used obsolete NIC thresholds and rates but also mishandled deductible expenses and underplayed the realworld result. If Jane had relied on the tool, she might have opted to incorporate unnecessarily and ended up paying more tax.

When it comes to AI vs Accountants there is no one size fits all answer to the sole trader vs limited company question. Profits, risk tolerance, growth plans and personal circumstances all play a part. A qualified accountant stays on top of legislative changes – such as the new £5,000 employer NIC threshold and 15 % rate , or the removal of Class 2 NIC – and can model how those changes affect your specific situation. Before making a decision that could impact your takehome pay and liability for years to come, always seek professional advice.

So to contact The Accountancy Office to discuss this more please click here or call us on 01386 366741

How much turnover does my business need to make to pay me what I want after tax?”

Posted on May 9, 2025November 12, 2025 by Sarah

“How much turnover does my business actually need to make… to pay me what I want… after all taxes?”

If you run a UK limited company and pay yourself a combination of salary and dividends, you might be wondering:

This is a deceptively complicated question. Why? Because income tax, dividend tax, corporation tax and personal allowance tapering all interact in messy ways. The wrong combination of income can trigger extra tax without giving you more in your pocket.

But what if you had a simple calculator that worked it out for you?

That’s exactly what I’ve created: a Turnover Target Calculator for UK Ltd Company Directors.

What the Calculator Does

This tool shows you the turnover required to achieve a specific monthly net income, after all taxes have been deducted.

You can enter:

Your desired net monthly income
Your business’s annual running costs
Your average gross profit margin

The calculator then shows:

The gross dividend required to reach your net income target
Tax due on your salary and dividends
Corporation tax
Total pre-tax profit required
The turnover you need to make it all happen

Tax Efficiency Built In

It also flags when you hit the messy part of the tax system:

Personal allowance tapering (starts above £100,000 income)
The “tax trap” zone where earning more = disproportionately higher tax

To make this easier to compare, the calculator uses a benchmark row set at a net income of £99,999.96. This helps you see exactly how much extra tax you’d pay if you go over it.

Why This Matters

Most small business owners overestimate how much income they can draw and underestimate how much profit they need to generate to get it. Worse, they hit tax traps without realising.

This calculator makes it easy to:

Set realistic income goals
Avoid the tax cliffs
Understand the true cost of drawing more
Forecast more accurately

Ready to Use It to calculate your Business Turnover??

The Turnover Calculator is formatted for ease of use, fully protected so you can’t break it, and designed to save you time, stress, and costly mistakes.

For a limited time, the Turnover Calculator will be available free of charge whilst testing is completed. After that, it will be available to purchase online via secure link.

Would you like to start planning smarter with free access today? Get in touch to request your free copy.

Need help with your limited company finances? I’m an accountant who specialises in helping business owners take control of their numbers and their income. Drop me a message if you’d like personalised support.

Financial Reporting Council – FRS 102 Changes from January 2026 – What It Means for Your UK Limited Company

Posted on March 28, 2025 by Sarah

The Financial Reporting Council (FRC) has announced changes to FRS 102 (the financial reporting rules for UK companies) that will take effect from 1 January 2026 (though you can choose to apply them earlier). These changes aim to make UK reporting more consistent with international standards. Here’s a simple breakdown of what’s changing and how it could affect your business:

New rules for recognising revenue
Revenue recognition will now follow a model similar to IFRS 15 (the international standard), but with some simplifications to make it easier to apply. This means you’ll need to recognise revenue more consistently based on when goods or services are provided, which could affect the timing of when you report income.
New rules for lease accounting
If your business rents property, equipment, or vehicles, you’ll need to show most leases directly on your balance sheet (in line with IFRS 16). This means leases will be recorded as assets and liabilities, which could affect your reported profits and financial position. There are some exemptions for smaller or short-term leases to reduce the admin burden.
Other changes
There are also updates to how you measure:
- Fair value – how you calculate the value of certain assets and liabilities.
- Uncertain tax positions – how you account for tax estimates when the outcome is uncertain.
- Business combinations – how you handle the accounting when you buy or merge with another business.
- Conceptual framework – updating the general principles that guide financial reporting to align with international standards.

Earlier change for supplier finance arrangements
If you use supplier finance (e.g., invoice financing or supply chain finance), the new rules for reporting these arrangements will apply from 1 January 2025.

What this means for you

Your financial statements might look different, with more assets and liabilities appearing on the balance sheet (especially for leases).
Revenue may be recognised at different times, which could affect reported profits.
You may need to update your accounting policies and systems to reflect these changes.

These changes aim to improve transparency and consistency in financial reporting – but they could also increase complexity. If you’re unsure how this affects your business, it’s worth discussing it with your accountant to plan ahead as to how these Financial Reporting Council changes could impact you and your business.

HMRC’s online Time to Pay system

Posted on January 30, 2025January 30, 2025 by Sarah

Can’t pay your tax bill in full by 31 January 2025? HMRC’s online Time to Pay system lets self-assessment taxpayers spread the cost over monthly instalments. With plans available for tax bills up to £30,000, this flexible option can help you avoid late payment penalties.

Those eligible for the self-serve option can arrange payments online without needing to contact an HMRC adviser. HMRC has revealed that more than 15,000 taxpayers have already set up a Time to Pay payment plan for the 2023-24 tax year.

To qualify for the online Time to Pay option, taxpayers must meet these conditions:

No outstanding tax returns
No other tax debts
No existing HMRC payment plans

For taxpayers who do not meet these requirements or owe more than £30,000, other payment arrangements may be available. These are typically agreed on a case-by-case basis, tailored to individual circumstances and liabilities, allowing businesses and individuals to pay off their debt over time.

HMRC’s Director General for Customer Services, said:

We’re here to help customers get their tax right and if you are worried about how to pay your self-assessment bill, help and support is available. Customers can set up their online payment plan to suit their own financial circumstances and can spread those payments across a maximum of 12 months. It is a valuable option for someone needing extra flexibility in meeting their tax obligations.

Once you have your plan in place, take time to review your finances and prepare for next year’s tax bill. To find out if you are claiming all tax allowances available to you, visit HMRC’s website.

If you need help preparing tax returns, for companies or individuals , our team is here to help. We offer a comprehensive accounting service .

Call us on 01386 366741 or email here and one of our advisers will be in contact.

Category: Limited Companies