The Fizz! Blog

How can I find out how much bank interest I’ve received?

Earning interest on cash in the bank is a good thing for savers, needless to say! But it does mean that a lot of people do now have to disclose interest to HMRC on their tax return, never having done so before. And, based on the frequency with which we’re asked about it, it can be quite tricky to figure out how much you’ve received in a tax year. In the olden days, banks would generally send you a paper certificate giving you the numbers. That’s pretty rare now.

There’s a good chance you can get the equivalent certificate/numbers from the banking app on your phone, but that’s not always the case. Based on a small sample at the time of writing, we reckon two of the three mainstream banking apps we looked at could provide an annual interest summary, though in neither case was it exactly where we’d expect to find it. A fourth told us via chat that they could post a certificate out on request, but also told us we could download it from a particular bit of the app - it wasn’t there, though.

If it’s not on the app, you might well be able to get the certificate/summary from online banking.

If not, then - you’re just going to have to look at your bank statements for the year and add the interest up! Sorry.

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If you had the cash, would you buy the thing?

Quite often, people come into possession of a thing, and it doesn’t initially occur to them that they don’t have to keep the thing.

If someone inherits a house worth £500,000, say, their initial reaction is very often that they’ll rent it out. If they’d inherited £500,000 cash, would they have bought a house just like that one to rent out? Not in a million years! So, logically they should just sell the house (there’ll be no tax to pay if they sell it as soon as they get it) and use the £500,000 cash to do whatever is better for them.

If someone on PAYE gets £150,000 a year of net pay and £100,000 of shares in their listed employer, normally their instinct is to hang on to the shares. But if their net pay was £250,000 a year cash, would they use £100,000 of it to buy shares in a single company, upon which their own income is also reliant? Not in a million years! They should probably sell some or all of the shares (again, tax-free if they do it right away).

When events like this happen, take a step back and think about what you’d do with cash. Because you could actually do that.

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Can I save tax on my Audible subscription?

Are you a sole trader who only listens to things related to your business? You can save tax on the entire cost.

Are you a sole trader who listens to both things related to your business and other stuff? You can save tax on the percentage of the subscription that you think fairly reflects the business part.

Are you a limited company owner who only listens to things related to your business? The company can pay for the whole subscription and save tax on the lot.

Are you a limited company owner who listens to both things related to your business and other stuff? Unless the personal element is more or less incidental, you should just pay the sub yourself; there’s no provision equivalent to the sole trader one for somehow splitting it, and if the company pays for it then you’d have to pay tax on the cost. Fortunately, it’s hardly an expensive thing to have to pay personally.

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What does the abolition of the Furnished Holiday Lettings regime mean to you?

If you don’t own an FHL, nothing! And even for some people who do own one, not much. But for some owners, the impending end of their special tax regime will make a difference.

Historically, rental properties that tick the boxes to be classified in this way (broadly, available for rent most of the year, actually rented to holidaymakers most of the time, and not to the same person for an extended period) have received special tax treatment. From April 2025, that will no longer be the case.

The revisions will remove the tax advantages that furnished holiday let landlords have over other property businesses:

• At present, unlike other residential property income, a landlord can save tax on all the associated interest payments - owners of conventional Buy To Lets can save 20% at most. Individuals owning an FHL will face the same restriction.
• FHLs have had more generous Capital Allowance rules. But they’re going, and instead the owner will get the same “replacement of domestic items relief” that other property businesses have.
• Capital gains tax reliefs based on disposing of a business asset will no longer apply to FHLs.
• FHL income will no longer be included within relevant UK earnings when calculating maximum pension relief.
• At the moment you can effectively allocate the profits to either owner of a jointly owned FHL, but under the new regime they will have to be split according to normal ownership rules.  These rules refer to the underlying legal ownership of the property - you'll need to refer back to how the ownership was set up when you bought it, and your accountant can tell you what that means for your rental profits

If you own properties that currently qualify for the FHL tax regime, you should definitely consider if and how the changes are going to affect you. They may make no difference to you - but they’re definitely not going to make anyone better off.

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Is it time to actually withdraw your Director’s Loan Account?

At any point in time, most directors of small limited companies either a) are owed money by their company or b) owe money to their company.  The former is obviously a nicer place to be in general.

Money owed by a company to a director can accumulate for lots of reasons, including funds actually lent to the company to get it started, expenses or mileage not yet reimbursed, allowances for working from home and so on.  Historically, many directors have been happy to let this Director’s Loan Account build up.  If you don’t need the money in your own life right away, you might well be happy to leave it where it is rather than risk frittering it away!

That was all very well when interest rates were next to nothing.  It didn’t matter too much whether you had the £30,000 or the company had the £30,000.  Nobody was going to earn interest on it, so if its purpose was to be a rainy day fund, it was fine left in the company.  Now, however, interest is a real thing!  If the director gets her loan repaid to her and puts it in a savings account, she’ll probably earn interest of £100 a month.  And some of that’s going to be tax-free, even if it’s not in an ISA.

The company could itself put the money in an interest-paying account of course (and, if the director is going to leave the money where it is, it probably should).  But the company will pay corporation tax on all of the interest, and then when the director one day takes that extra money out of the company, she’ll pay tax too!

So, think of making savings work for you, and if you’ve money in your company that you can draw out tax-free, now may well be the time to do it.

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Avoiding the Child Benefit trap, revisited

The advice for parents trying to avoid being drawn into the High Income Child Benefit Charge (HICBC) has been unchanged since 2013, as none of the thresholds ever changed. Since they have, at last, been increased, here’s an update on actions you might take to avoid or mitigate the charge.

If the higher earner in a household that has received Child Benefit has income of more than £60,000, they have to start giving the Child Benefit back to the government again, on a sliding scale, via their Self Assessment Tax Return. If they have income of more than £80,000, they have to give it all back.

If both parents earn £60,000, that's therefore fine - nothing to give back, even though total household income is £120,000. But if one earns £80,000 and the other zero (or a single parent has income of £80,000) then all of the Child Benefit has to be given back, despite household income being £40,000 lower!

If you've two children, HICBC could mean giving back £2,200 of Child Benefit to the government.

The most obvious way you could avoid or reduce the charge is with pension contributions. If your income is £70,000, then paying £10,000 into a pension reduces your income to £60,000 for these purposes, and you get to keep all the Child Benefit (as well as saving £4,000 of tax too - the way the tax reliefs work means that getting £10,000 into their pension ends up costing that person only £6,000). Of course, if you're struggling with household income to begin with, or earning way over £80,000, things may not be as easy as that and HICBC may be unavoidable. But if you can stand the short-term cashflow hit, for those around the fringes of the charge, pension contributions can become very compelling - and the more children you have, the greater the saving!

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Is it time to start claiming Child Benefit again?

There was a big change in the Budget to the High Income Child Benefit Charge (HICBC), which obliges high earners to repay Child Benefit via their Self Assessment Tax Return. Since the initial threshold for being a high earner (£50,000) was not changed for 11 years, more and more people were dragged into its net, most of whom would not have been considered high earners in 2013. At long last the thresholds have been increased, though. Previously, a household where the higher earner had income over £50,000 had to begin repaying the Child Benefit on a sliding scale - if their income was over £60,000, all of it had to be repaid. This year, HICBC doesn’t start until the higher earner has income over £60,000, and the sliding scale is more gentle - it’s not until income of £80,000 that the whole lot must be repaid.

In practical terms, many households with someone earning over £60,000 just opted not to receive the payments in the first place, knowing they’d only have to give them back again.

What do the changes mean in practical terms?

If the higher earner has income between £50,000 and £60,000

Hopefully, you’ve been claiming all along, because you’d only have to repay part of it via a Self Assessment Tax Return, and would still have been better off. Now, you won’t have to repay anything at all. If you were only in the Self Assessment Tax Return system for the purpose of paying HICBC, good news - you won’t have to submit tax returns any more.

If the higher earner has income between £60,000 and £80,000

You may well have stopped claiming, knowing you’d only have to repay the whole lot to HMRC in the end. You should probably start claiming again! Some of it will need to be repaid, but not all. If the higher earner isn’t presently submitting Self Assessment Tax Returns, they’ll have to start, though, so if you’re going to have to repay 95% of what’s been received it’d be understandable if you decided to carry on not claiming.

If the higher earner has income over £80,000

Nothing has changed - if you claim, you’ll have to repay it all.

Two final things:

1. Even if you know the higher earner will have income over £80,000, it’s still advisable to claim Child Benefit, but then opt out of the payments. A claim means that a primary carer will get State Pension credits (aka their National Insurance stamp) until the child is 12, and that the child will automatically get their own National Insurance number at age 16.
2. We say the charge is based on income, but it’s more complicated than that - for instance, benefits in kind need to be added on too, but personal pension contributions are knocked off the figure. Someone with a salary of £59,000 but company car and medical insurance benefits of £6,000 has income for these purposes of £65,000 and on that basis will have to repay 25% of the Child Benefit received - but if they make personal pension contributions of £5,000 that’ll take their income for HICBC purposes back down to £60,000, meaning no HICBC need be paid.

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Your business probably isn’t going to pay for your retirement

It’s really common for business owners to believe that selling their business is going to be, or should be, what pays for their retirement. It’s very rare for that to really be the case.

First, most businesses are worth little or nothing. There’s nothing wrong with that! It’s just a fact of life. Your business may make a nice living for you, but that doesn’t mean that someone else is going to give you money to take it over - the revenue stream may be very much reliant upon your personal relationship with the customers, or it might just be a fair reward for the work and hours you put in. Some businesses are more or less jobs, and it’s unlikely anyone wants to buy your job.

Second, businesses that are worth something are rarely worth life-changing amounts. A typical rule of thumb is that a small business that generates steady profits that aren’t reliant on its owner and are above and beyond a normal commercial wage for them could be worth three or four years’ worth of profits. If you build up your business over 20 years, it’ll be nice to get a bonus of another three years’ worth of income at the end, for sure. What are you going to do in year four, though?  OK, if the income generated by your business is miles in excess of your domestic spending, the money you get from selling it might last much longer. But if you’ve got to a place where your business was generating a lot more money than you're spending personally, you’ll have plenty of money saved up anyway and won’t be so reliant on selling the business.

We often hear people expressing concern that they won’t be able to sell their business when they retire. Someone with a well-paid job doesn’t have anything to sell when they step away from it either, but should be able to plan for retirement regardless. As a business owner, you are not immune from having to save up like everyone else!

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I’m moving abroad - is this going to affect me and my limited company?

20 or 25 years ago, international tax was something you studied a bit when training as an accountant, but in practical terms only those advising the very wealthy really had to engage with it. There was far less global mobility, relatively few freelancers moving to and from the UK, and digital nomads hadn’t been invented yet.

How things have changed! Now it’s really common for people - especially knowledge workers - to move in and out of the UK. International tax is no longer a theoretical subject!

So, it’s very common for us to have clients who arrive in, or leave, the UK. If you’re a sole trader or an employee, it’s probably fairly straightforward; mostly, people making “clean”, permanent moves are going to get something called “split year treatment”. That means that in the year of arrival only their income post-arrival goes on their tax return, and in the year of their departure only their income pre-departure. There can be some minor friction where they’ve moved to a country that considers them to have become resident there before or after they’ve ceased to be resident here, they may have other things going on (like property or investment income) that are more complex, and when moves aren’t so clean the deceptively complicated Statutory Residence Test comes into play, but most cases are pretty simple.

But if you have a limited company it’ll be messier. In our experience, it’s vanishingly rare for the continued use of a UK company to be a good idea post-departure. If you were a non-UK resident starting a new business, the circumstances under which a UK company would be the best vehicle would be somewhere between rare and non-existent. Leaving the UK whilst in possession of an LTD doesn’t change that underlying reality. Sometimes you might need to persist with your UK LTD for a bit (perhaps there’s an ongoing contract in progress that you need to finish), but in the end you’re going to want to set up whatever structure is most advisable in your new home.

Unfortunately, it can be quite difficult to execute this at the other end! It seems to be very common for someone to go to an accountant in France, for example, only to be told to just keep their head down and pay taxes as if they continue to reside in the UK. As UK taxpayers, we are quite happy for people to pay tax money into UK coffers rather than those of another country! However, as Chartered Accountants, that can put us in a difficult position; we can’t collaborate on a setup where we know that taxes aren’t being paid appropriately, or National Insurance credits being built up by someone who is not really entitled to them, or UK pension contributions being made in excess of the modest “run-off” amount available for a few years to someone leaving the UK, and so on.

It can be further complicated because often people won’t know their plans for sure. Someone who expects to be in Portugal for a year or two might not want to go to great efforts to set up a structure that they’re soon going to dismantle. But that’s always been the case; we’re quite likely to advise someone who comes to the UK with the intention of staying for a couple of years differently to someone who intends it as their forever home.

So, if you’re leaving the UK, please go and see an accountant in your new intended home as soon as you can! Your accountant here may be able to tolerate a period where you’re getting things set up at that end and continuing to run things at this end as you have been. But they won’t be able to tolerate it indefinitely.

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Can my company get a grant towards an electric car charging point at home?

The government will provide a grant to an employer installing a charger for an electric car.  It’s only a maximum of £350 at present, and it involves filling a form and sending it to the not-always-tremendously-efficient DVLA, but every little helps.

What if you work from home, though?  Well, if your electric car is a company car, your company can definitely pay for, and save tax on, the installation of the charger there.  But you might not think it worth claiming the grant, because of the eligibility criteria.  To qualify, your home must either be a) the company’s Registered Office, which you probably don’t want, or b) registered with the council for Business Rates, which you almost certainly don’t want.  Given the modest grant and the prospect of dealing with the DVLA, you probably just want to move on!

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