Blog

Many directors of small companies, particularly those who have transitioned from self-employment, often blur the lines between business and personal finances. Running all expenses through the company bank account may seem convenient, but doing so can lead to significant tax consequences. In this post, we explore the tax position when a company pays for a director’s personal expenses and provide practical insights to help business owners navigate this issue effectively.

When it comes to VAT, the rules on reclaiming input tax can be tricky — especially when it involves entertaining customers. While VAT on business expenses is generally recoverable, HMRC places strict limitations on VAT recovery for business entertainment. However, there is a key exception when it comes to entertaining overseas customers. In this post, we’ll break down what qualifies as business entertainment, when VAT can be reclaimed, and provide real-world examples to illustrate the rules in practice.

The UK Government has announced significant changes to National Insurance contributions (NICs) and the Employment Allowance, set to take effect from 6th April 2025. These changes are aimed at strengthening public finances while continuing to support businesses and public services.

Directors of UK companies are classed as employees for National Insurance (NI) purposes and must pay contributions on their salary and bonuses once their annual earnings exceed the primary threshold of £12,570. These contributions are deducted at specific rates depending on the level of earnings, ensuring that directors contribute towards state benefits and pensions.