A new client recently came to me after becoming increasingly frustrated with the service he was receiving from his previous accountant.
He worked as a consultant in the renewable energy sector and was earning good money. The problem was that he could never actually speak to his accountant. Everything was done through WhatsApp messages, with very little discussion about his wider circumstances, or future financial plans and goals.
That became a serious (and potentially expensive!) issue when advice was given on salary levels.
The accountant had recommended taking a salary of £12,570 because it was supposedly the “most tax efficient” option. In many situations, that advice can be perfectly reasonable.
In this case, however, my now client had already earned around £120,000 during the tax year from other sources and also had personal savings available. Taking an additional salary created an unnecessary tax cost that the previous accountant hadn’t considered.
After reviewing everything properly, my advice was very different. For the remainder of that tax year, the most efficient salary level was actually nil. We could then review the position again at the start of the next tax year and plan accordingly.
That simple change alone saved the client around £7,000 in year one.
This situation highlights a problem I see far too often. Some accountants rely on generic rules without properly understanding the client. A salary level that works brilliantly for one contractor can be completely wrong for another. That is why regular conversations matter – either over the phone or face to face.
I always encourage clients to contact me if there is a significant change in income, profits, contracts, family circumstances, or future plans. Those conversations do not need to be long. Often, a short check-in is enough to spot an opportunity or avoid an expensive mistake.
Sound familiar?
If you are struggling to get clear advice from your current accountant, or you feel like nobody is really looking at the bigger picture, it may be time for a second opinion.
If this sounds familiar, get in touch with me on 07866 465 223 to see how I can help.