Maximise Your Income - Be in the Know

If you run a business or work as a sole trader, you’re already familiar with payroll, tax, and compliance. But did you know that household benefits and tax-free schemes available to your employees or even to you can also impact your financial planning, payroll, and the advice you provide? If we talk about benefit it basically is a talk about additional income. In this article, we’ll look at key benefits like Winter Fuel Payment, Child Benefit, and Tax-Free Childcare, and explain how they connect with tax and business accounting. We’ll also show how Friendly Assist Accountancy Ltd can help you support your clients or your own business so you’re prepared for any surprises.

What are Winter Fuel Payments?

Winter Fuel Payments are government support payments designed to help pensioners keep their homes warm during the colder months. For the 2025-26 winter season:

If you were born on or before 21 September 1959, and meet the residence criteria during the qualifying week (15-21 September) you may be eligible.
The payment is tax-free at the point of receipt for most recipients.
Typical payment amounts range from roughly £100 to £300 depending on age and household status.

Why it matters for business owners and payroll

Although the Winter Fuel Payment is targeted at individuals, businesses with pension-age employees or directors should still be aware:

It contributes to employee well-being. Knowing that older employees or directors may receive it gives you insight into their personal financial position which can affect engagement, retention and productivity.
It can create payroll or tax code issues. If a pension-age employee or director earns more than £35,000, the payment might be recovered through changes in PAYE tax codes or through a Self Assessment return. Your payroll systems and advice should be prepared for this.
You can position yourself as the trusted advisor. Helping your team (or clients) understand what the payment means, how to check their codes, and what to do avoids future headaches.

The tax implications: what your business should know

The payment is generally tax-free for the recipient, but where their income is above £35,000 it will be recovered by HMRC via tax-code changes through PAYE or by Self Assessment.
For PAYE employees the recovery typically begins in the 2026/27 tax year via an adjusted code.
For directors/contractors or sole-traders who file Self Assessment the amount may be included on the 2025/26 tax return (or they may need to add it manually if not shown).
Businesses and accountants should check payroll codes, ensure tax-codes are applied correctly, and advise pension-age staff or directors accordingly.

But there’s more: Child Benefit and Tax-Free Childcare

Here’s where it gets relevant for working-age sole traders, directors and business owners, too.

Child Benefit

Child Benefit is a payment to a person responsible for a child who is under 16, or under 20 if in approved education or training. GOV.UK+2Turn2us+2
It is normally tax-free, and you can still claim even if you or your partner don’t work, which means it supports those building their business or sole trading. Turn2us+1
However there is the High Income Child Benefit Charge (HICBC): if either you or your partner’s adjusted net income exceeds £60,000, you may have to repay part or all of the Child Benefit via a tax charge. House of Commons Library+2Turn2us+2
If the income is between £60,000 and £80,000, you pay back 1 % of your Child Benefit for every £200 of income above £60,000. If it’s over £80,000, the charge is equal to the full amount of Child Benefit received. Turn2us+1
Why it matters: If you are a director or sole trader approaching those income levels, claiming Child Benefit can still be worthwhile (especially for NI credits) but you’ll want advice on how your business profits and personal income interact with the threshold.

Tax-Free Childcare

The Tax-Free Childcare scheme supports working parents and self-employed workers. If eligible, you can receive government top-ups to help cover childcare costs. GOV.UK+1
One useful tip: this scheme works for self-employed/sole traders too. If you expect average earnings above certain minimums (for example £10,158 per year) you may qualify. GOV.UK
So, if you’re growing your business and have children, this is a benefit you should consider. Your accountant should also include it when working out your net income, personal allowances, and business drawings.

How all this ties into your business and advisory role

Why should you, as a business owner or accountant to small businesses and sole traders, care about these benefits? Because they affect:

Personal income planning: If you’re advising a sole trader or are one yourself, understanding when benefits are clawed back helps you plan salary drawings, directors’ remuneration, pension contributions and timing.
Tax-planning opportunities: For example, if a director’s “adjusted net income” is creeping towards £60,000 (Child Benefit threshold) or above £35,000 (for Winter Fuel Payment recovery), you might want to advise on pension contributions, salary sacrifice or other steps to reduce taxable profit / income.
Payroll / systems accuracy: For pension-age employees/directors the Winter Fuel Payment recovery means you’ll need correct tax codes; for parents the company’s accountants might want to ensure the sole trader or business owner isn’t inadvertently triggering the HICBC without realising.
Employee and owner wellbeing: Being aware of these benefits lets you have broader conversations with your team or clients about cash flow, household budgeting, and business income strategy, not just business accounts.

Practical checklist for employers, business owners and accountants

Identify which employees or directors may be eligible for Winter Fuel Payments (e.g., born on or before 21 September 1959) and check their payroll/tax code aligns.
Identify who in your business or client base has children and is eligible for Child Benefit, and check whether household income might trigger HICBC or whether claiming Child Benefit (even without payment) is still worthwhile for NI credits.
For sole traders or business owners with children, check eligibility for Tax-Free Childcare and make sure that business income drawings, pension contributions and personal income planning reflect that.
Keep an eye on adjusted net income (income after allowable reliefs) if you’re close to the thresholds for HICBC or Winter Fuel Payment recovery. The timing of drawings, pension contributions, or dividends can make a difference.
Ensure your payroll and accounting systems are up to date: correct tax-codes, accurate drawings/earnings, and proper classification of benefits.
When in doubt, seek specialist advice: a small change in income, pension contribution or business structure may shift whether a benefit is fully available or whether a charge is triggered.

Why talk to Friendly Assist Accountancy now

At Friendly Assist Accountancy Ltd, we specialise in supporting sole traders, directors of small companies, and small‐business owners with exactly this kind of interplay between business earnings, personal benefits, and tax-planning. We can help you:

Navigate benefit thresholds like HICBC and Winter Fuel Payment recovery and understand how they impact your income strategy.
Structure your business drawings, remuneration, pension contributions, and benefits in a way that gives you the best outcome.
Ensure your payroll, tax codes, and accounts are fully compliant and up to date, reducing the risk of HMRC interaction or unexpected charges.
Provide clear, jargon-free advice that links your business success with your personal financial well-being.
Keep you ahead of regulatory or tax-rule changes so you’re not reacting — you’re planning.

If any of this strikes a chord — whether you’re a sole trader, business owner or managing payroll for older staff — we’d be happy to talk it through and show you how we can support your next steps.