As a contractor, managing your finances effectively is crucial to maximising your earnings and minimising tax liabilities. With HMRC’s new mandate on benefits in kind (BIK) coming into effect from April 2026, it’s more important than ever to have a solid tax planning strategy in place. Here are some tailored tips to help you optimise your financial situation, along with how Futurelink Group can support you.

Understanding Your Tax Obligations

1. Claim Business Expenses:
   • Ensure you’re claiming all eligible business expenses to reduce your taxable income. This includes travel costs, equipment purchases, and home office expenses.
   • Keep accurate records, as these will be essential for tax returns and potential audits.
2. Optimise Salary and Dividend Distribution:
   • Consider a strategic approach to salary and dividend distribution to minimise tax liabilities. For instance, taking a lower salary and higher dividends can be tax-efficient, but ensure compliance with IR35 rules.
   • Futurelink Group can provide guidance on the best distribution strategies for your situation.
3. Utilise Pension Contributions:
   • Contributing to a pension can be highly tax-efficient. Pension contributions are deductible expenses for corporation tax, saving you up to 26.5% on corporation tax.
   • Futurelink Group can help you navigate these contributions effectively.
4. Consider the Flat Rate VAT Scheme:
   • If you’re VAT-registered, the Flat Rate VAT Scheme can simplify your VAT management and potentially reduce your VAT liability.
   • Futurelink Group can advise on whether this scheme is suitable for your business.
5. Prepare for Making Tax Digital (MTD):
   • From April 2026, MTD will require digital record-keeping and quarterly submissions for income tax. Ensure you’re using compatible software to avoid penalties.
   • Futurelink Group can assist in setting up digital systems to comply with MTD requirements.

Preparing for HMRC’s New BIK Mandate

• Understand the Changes: From April 2026, most BIKs will need to be reported through payroll, affecting how your benefits are taxed.
• Review Your Benefits: Assess which benefits you receive and how they will be impacted by the new rules. Adjust your benefits strategy if necessary to minimise tax implications.
• Communicate with Your Employer or Umbrella Company: Ensure they are prepared for the changes and understand how they will affect your payslip.

Futurelink Group’s Expertise

At Futurelink Group, we specialise in providing comprehensive payroll solutions tailored to the needs of contractors. Our services include umbrella PAYE, CIS, Gross Payment (GPS), and LTD options, designed to simplify your payroll administration and safeguard your employment status.

If you’re looking for expert guidance on tax planning or need assistance with your payroll, please contact one of our consultants on 01923 277900 or visit our website to explore our services and discover how we can support you.