How do UK limited company directors extract income tax-efficiently?

Directors typically combine a low salary (aligned with the Primary Threshold for National Insurance) with dividends drawn against accumulated post-tax profits. Employer pension contributions into a director SIPP are also highly efficient, reducing both Corporation Tax and personal Income Tax. Relying on ad-hoc dividends without a considered extraction plan usually leaves Corporation Tax higher than it needs to be and can push personal income into the higher-rate band. We design a formal extraction plan each year as part of the annual tax planning engagement.

What are the Construction Industry Scheme (CIS) and Domestic Reverse Charge VAT rules?

CIS requires contractors to deduct tax at source on payments to subcontractors, but only on the labour element. Deducting CIS on materials is not allowed. The Domestic Reverse Charge shifts the VAT-accounting responsibility on construction services from the supplier to the customer. Errors in either area can cost you Gross Payment Status or trigger HMRC enquiries. We review your invoicing and put both right where they have drifted.

How does Section 24 affect UK landlords, and what are the alternatives?

Section 24 stops individual landlords deducting mortgage interest from rental income before tax. Instead, they get a basic-rate tax credit, which can wipe out the profit on paper for higher-rate taxpayers. For growing portfolios, transferring properties into a limited company (a Special Purpose Vehicle, or SPV) often restores full interest deductibility. The transfer itself triggers Stamp Duty Land Tax and Capital Gains Tax, so the maths has to be modelled carefully against your actual rents and finance costs before any restructuring.

What is the MTD for ITSA 2026 mandate and who does it apply to?

Making Tax Digital for Income Tax Self Assessment is now live for sole traders and landlords with combined gross income over GBP 50,000 (from 6 April 2026). The threshold drops to GBP 30,000 from April 2027. Anyone caught by the rules must keep digital records, use MTD-compatible software, and submit quarterly updates plus a Final Declaration to HMRC. The first quarterly deadline is 7 August 2026. Spreadsheets alone do not satisfy the digital-links requirement. We migrate clients to MTD-compatible cloud software and act as their MTD agent for quarterly submissions and the Final Declaration.

Chartered Management Accountants

Chartered management accountants and year-round tax planning

Tax planning before the year closes, current numbers when your fee includes regular reporting, and Making Tax Digital 2026 taken care of. The fee is fixed and written down before any work begins. For UK limited-company directors, sole traders, landlords and trades.

Request a consultation See how our fees work

Management accounting

How management accounting can work for your business

CIMA accountants are trained to understand how a business works, not just how the accounts are prepared. That means handling the essential compliance work properly, including accounts, tax, VAT, payroll, bookkeeping and filing deadlines, while also looking at profit, cash flow, pricing, costs, margins and plans in a way that gives you clearer information.

We can provide compliance, management accounts, or both, depending on what your business needs. For some businesses, that means reliable accounts and tax work delivered on time. For others, it means regular management information, forecasting and cash-flow support to help with decisions around pricing, investment, hiring and profitability. The benefit of CIMA is that the practical work is covered, while the advice stays focused on how the business is performing.

The regular figures show:

How profitable you are right now.

With the figure in front of you before the year closes.

What you owe HMRC, well before the deadline.

We forecast the liability early enough that there is still time to plan around it.

The numbers before you commit.

Taking on staff, borrowing money, opening a second entity. We check the figures with you before you commit.

Guides

Common tax questions

The decisions every UK business owner runs into, explained in plain English.

Director pay

Salary vs dividends 2026

How directors should structure income from a limited company.

Corporation Tax

How much Corporation Tax will you pay?

Understanding marginal relief and current UK tax bands.

Management accounts

Do small companies need management accounts?

When they start to pay for themselves.

MTD

Making Tax Digital 2026 explained

What landlords and sole traders must prepare for.

Your first month

Your first month with us.

The first month is where the hard work starts. We get to know how your business operates. We set up the software, reconcile the opening balances, and close things off with your outgoing accountant.

A call in the first week.

We work through your position in detail. How the business trades, where the opening balances land, your year-end and Companies House dates, payroll and pension status, VAT scheme, the software you currently use, what the previous firm has finished and what they have not, and which figures you need to see during the year. You leave the meeting with a written engagement letter and a shared deadline calendar for the year ahead.
We send the Professional Clearance letter to your outgoing accountant.

Once you've signed the engagement letter, we send the Professional Clearance letter to your previous accountant and file the HMRC 64-8 to register as your agent. Both happen in parallel. You don't need to write to anyone, or chase anyone. Two parts of the timing sit outside our control: how quickly your previous firm responds, and how long HMRC takes to process the 64-8. We do the chasing on both, weekly, instead of promising you a date we can't keep.
We set up your cloud bookkeeping (or fix the one you already have).

If you're starting fresh, we configure Xero, FreeAgent or whichever platform fits the business. If you already have one, we take it over and tidy the chart of accounts so it reflects how you trade. Bank feeds get connected, opening balances reconciled, and we review the historic ledger back to a point we're happy to sign off. Anything from the previous engagement that doesn't reconcile, you'll hear about in writing.

After the first month the work settles into a regular cycle. Filings are lined up well ahead of the deadlines, the tax figures are updated as the business changes, and if your band includes management accounts, the reporting dates are agreed with you. The full picture across the first month, the ongoing work and the advisory side is on how we work.

Where it usually goes wrong

The tax problems we see most often.

HMRC's rules don't sit still. The four areas below cost UK directors the most money in a typical year, and they are all worth looking at before year-end. Leave them too late and the cheaper options have usually gone.

How you pay yourself and dividend rules

Taking dividends ad hoc, without modelling the salary alongside them, usually leaves you paying more Corporation Tax than you need to. Worse, it can quietly push your personal income into the higher-rate band without anyone flagging it. We work out the right mix of salary, dividends and (where it fits) employer pension contributions, so you keep more of what the company makes. We revisit the split after each Budget so the figures move with the rules.

Construction (CIS) and Reverse Charge VAT

Two CIS mistakes come up again and again, and either one can put your Gross Payment Status into HMRC review. The first is deducting CIS on materials, which is not allowed. The second is applying the Domestic Reverse Charge incorrectly on the VAT side. We rebuild the invoice templates and the customer-supplier flags in your software during onboarding, then check the CIS returns when they fall due.

Property portfolios and Section 24

Section 24 stops landlords deducting mortgage interest from rental income before tax. For higher-rate taxpayers, the restriction alone can wipe out the profit on paper. Holding the portfolio through a separate property company (sometimes called a Special Purpose Vehicle, or SPV) usually restores the full interest deduction. The catch is the transfer itself. Moving properties across triggers both Stamp Duty Land Tax and Capital Gains Tax, and the maths can run either way depending on gearing, holding period and your personal tax band. We check both routes against your actual rents and finance costs before you commit either way.

MTD for ITSA 2026, now live

Making Tax Digital for Income Tax is now live. If you're a sole trader or landlord with combined income over £50,000, you have to keep digital records and submit quarterly updates through approved software. The first deadline is 7 August 2026. The threshold drops to £30,000 in April 2027. Run our date check to see where you stand.

Quick tax check

What is your current business structure?

By sector

Accounting that fits your industry

Every business is different and each industry has its own challenges and rules to follow. The sector pages below are written separately because the tax detail in each one is different enough to matter.

Property and landlords

Section 24, Capital Gains Tax on disposals, and working out whether a property company makes sense.

Trade and construction

Keeping your Gross Payment Status, handling CIS returns, and getting Reverse Charge VAT right.

Consultants and IT

IR35 status, working out the best salary and dividend split, and planning for when the contract or company winds down.

E-commerce

Making sense of marketplace fees, tracking what you keep after platform costs, and sorting cross-border VAT before the thresholds hit.

Sole traders

Self Assessment, allowable expenses, MTD for ITSA, and working out whether it is worth incorporating.

See all services

Already with another accountant

We handle the whole handover.

Switching is straightforward. Once you're on board, the regular work starts:

Someone to ask during the year.

We pick up the phone while the question is still live, before the decision has to be taken.
A tax forecast so you can plan how to pay yourself before year-end.

We work out the best mix of salary, dividends and pension before the year closes.
A regular report that shows you how the business is doing.

Where profit landed, what you owe HMRC, and where things are heading. Written so you can read it in five minutes.

We handle the admin: the email to your outgoing accountant, the HMRC 64-8 filing, advisor access on your cloud bookkeeping, the ledger walk-back, and the AML and identity checks. Two parts of the timing sit outside our control. How quickly your previous firm replies, and how long HMRC takes to process the 64-8. We chase both, weekly, and keep you in the loop instead of promising you a date we can't keep.

See the full handover process

Initial consultation

Want to know where you stand?

Book a call. We go through your situation, look at what would change with accounting support through the year, and follow up with a written proposal. You decide after you have read it.

Request a consultation

CIMA chartered MTD for ITSA ready Fixed fees

MTD for ITSA 2026 Readiness Checklist

Fee bands, in writing