5 Rivers Accountancy

Two friends, John and Eddie, earned roughly the same money.
John's tax bill: £4,372
Eddie's tax bill: £16,872

Eddie is pi**ed. He wants answers.

Here's why the amounts were so different:
Reason 1: Student Loan
Eddie has outstanding student loan.
All earnings above £27,295 taxed at additional 9%.
John never had a student loan.
On £60,000 earnings:
Student loan repayment: (£60,000 - £27,295) × 9% = £2,943
Eddie pays this. John doesn't.

Reason 2: Child Benefit
Eddie has 2 kids and receives child benefit.
He earns over £60k, so has to pay it ALL back.
Child benefit clawback: £2,212
John has no kids. No clawback.

Reason 3: Payments on Account
Eddie's first year in business—no payments on account made yet.
John's been trading 3 years—already made payments on account.
Eddie's bill includes:

This year's tax: £8,330
Payment on account (50%): £4,165
Payment on account (50%): £4,165
Student loan: £2,943
Child benefit: £2,212

Total: £16,872
John's bill includes:

Balance from this year: £2,186 (after deducting payments already made)
Payment on account: £2,186

Total: £4,372
Same income. £12,500 different tax bill.

The lesson:
Tax is complicated.
Your bill depends on:

-Student loan status
-Child benefit
-Previous payments on account
-Number of tax years trading
-Dividend vs. salary mix
-Other income sources

This is why comparing yourself to others is dangerous.
"Why is my tax bill higher than my mate's?"

Because your situations are different focus on understanding YOUR position!

Want to influence Tax support for small business owners and entrepreneurs please contribute your ideas to this government request

https://www.gov.uk/government/calls-for-evidence/tax-support-for-entrepreneurs-call-for-evidence

Your 2025 Tax Bill Is Already Rising… Even If Your Profits Aren’t.

The Budget introduces multiple stealth increases:
✔ Higher tax on dividends
✔ Higher tax on savings
✔ Higher property taxes
✔ Higher benefit-in-kind charges
✔ Frozen thresholds pushing you into higher bands

If your business is doing £200k–£2m, these “invisible” rises hit harder because you pay tax in more than one place; salary, dividends, assets, vehicles and savings.

👉 If you want one clear plan that covers your business AND personal tax, contact 5 Rivers Accountancy today.