Lawrence Grant LLP

Did you know… VAT registration ( £90,000 threshold) timing can materially affect business cash flow?

Registering too late risks:

• Penalties
• Backdated liabilities

Registering too early may create:

• Pricing pressure
• Administrative complexity

VAT strategy is not just compliance—
It is a commercial positioning.

Did you know… many UK professionals earning £100,000 and £125,140 face an effective tax rate far higher than expected?

Why?

Because between £100,000 and £125,140, earnings are taxed at an effective tax rate of 62%:

• Personal allowance reduces by £1 for every £2 earned over £100,000, meaning taxed at 60%
• 2% is added also in National Insurance pushing your total marginal exposure to 62%
• Lose eligibility for tax free child care and 30 hours free childcare

The marginal impact can be significant without planning.

Did you know… director's loan accounts (DLA) are one of the most misunderstood areas in small business taxation?

Improper handling of an overdrawn DLA can trigger:

• S.455 corporation tax charge of 35.75% applies to overdrawn DLA not repaid within nine months and one day of the company year-end
• Benefit-in-kind implications occur on overdrawn DLA over £10,000 triggering personal income tax
• Anti-avoidance rules block directors from clearing loans just before the year-end to borrow them again shortly after.

What looks like “temporary borrowing” can create long-term tax consequences.

Did you know… inheritance tax planning (IHT) is increasingly becoming a middle-class issue—not just a wealthy family issue?

Why?

Because rising property values combined with frozen tax allowances and changes in tax legislation mean:

• More estates exceed thresholds such as the nil-rate band of £325,000 and residence nil-rate band £175,000
• More families face unexpected exposure - modest homes purchased decades ago now exceed IHT thresholds
• More assets become taxable - unused pensions from 6 April 2027 will be subject to IHT in the value of a deceased's estate

Many people affected never previously considered themselves “high net worth."

Did you know… many UK business owners unintentionally create personal tax inefficiencies through lifestyle spending?

Examples include:

• Using personal funds instead of company resources
• Extracting profits without planning
• Poor timing of large purchases
Simple habits like missing out on allowable business expenses, mistiming withdrawals, or failing to balance salaries and dividends result in steep overall tax losses.
Small decisions repeated over years often create the biggest inefficiencies.

Did you know… incorporating a business is not automatically tax efficient anymore?

Years ago, incorporation often created clear savings.

Now, factors such as:

• Corporation tax increases: Graduated or flat corporation tax rates require comparing your business profits against personal income tax brackets.
• Dividend tax changes: Recent reductions in tax-free dividend allowances mean that extracting profits above your allowance triggers personal tax.
• Administrative costs: Accounting, filing, and payroll expenses for a limited company often outweigh small tax savings.

This means the answer is no longer universal.

Structure should follow numbers—not assumptions.

Did you know… the UK’s higher interest rate environment has changed tax planning decisions?

What worked during low-interest years may no longer be optimal.

For example:

• Higher mortgage interest cost may lead to property investors incorporating to be able claim interest fully
• Higher Investment returns has revived the appeal of fixed-income products
• Borrowing through companies carries different implications

Financial structures should evolve with economic conditions—
not remain fixed.

Did you know… pension contributions remain one of the UK’s most underused tax planning tools?

For company directors:

• Employer pension contributions may reduce corporation tax
• Investments can grow tax efficiently within a pension wrapper
• Personal tax exposure may decrease

Yet many directors prioritise short-term extraction over long-term planning.

Strategic benefits of this approach offer far more long-term value and is not only about today’s tax bill.

Did you know… HMRC’s data visibility is now far wider than most people realise.

Today, HMRC can access information from:

• UK banks
• Overseas financial institutions
• Online platforms and marketplaces
• Crypto exchanges in certain jurisdictions

The assumption that “small transactions go unnoticed” is increasingly outdated.

Did you know… frozen tax thresholds are quietly increasing the UK’s effective tax burden?

Even without tax rate rises:

• Salaries increase with inflation
• Thresholds remain static
• More income moves into higher tax bands

This is known as “fiscal drag.” It acts as a “stealth tax” because the total tax take increases without raising headline tax rates.

Many taxpayers believe their income has improved, while their real post-tax position has worsened.