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AIBU?

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Original poster

To shut down my small business because Scottish income tax rates are too high

37 replies

Pavementworrier · 31/12/2025 08:44

I work full time as an employee and run my business in my spare time. I do love it, if provides an important service, I give preferential rates to those who would struggle to pay otherwise. But I'm keeping less than half of what the business makes after tax (and I'm lucky because I don't need physical premises - if I did I'd be close to literally paying to work).

I will feel sad to shut it down as it's become part of me over the years and I do think it adds to my community but I'm at the end of my rope at this point.

If public services were good I'd feel very differently but they're awful and the government reliably steers money away from them to put into the wrong things

Maybe I should just move to Dubai (only joking - but I can see why people do and that's depressing as well - we need to break the bloody cycle)

OP posts:
JamesClyman · 31/12/2025 09:27

You need an accountant.

Jellycatspyjamas · 31/12/2025 09:03

I’m in the same position in that I work in a well paid role and run a small business. There are ways to lower your tax burden, are you recording all your business costs, registration, travel and any CPD costs? If you’re working from home do you include the tax free allowance? Are your fees set at a reasonable level which accounts for your tax burden, can you make pension contributions to lessen your tax?

At the end of the day there’s a much more visible link to the tax you pay when it’s your own business when you see half your hourly rate set aside for tax. I do also think that I can’t complain about poor public services while avoiding paying tax - I’m happy to pay my due despite higher tax rates in Scotland.

It’s important to look at the wider benefits of your work too - the skills and experience you gain, the contribution to society, the security of having a safety net if something happens to your main employment. I keep my small business because it gives me an important element of work that I know don’t get in my day job. I’d miss that hugely and the practical experience is invaluable in my day job, which is more strategic.

TheCompactPussycat · 31/12/2025 09:03

Yes. Shut it down and then you can keep zero of what the business makes after tax. That's a far better idea. Someone with more determination can fill the vacuum.

Original poster
Pavementworrier · 31/12/2025 09:01

Fleur405 · 31/12/2025 08:53

Sounds like you should be running your business through a company - much more tax efficient.

That's definitely not the case at the smaller end of the scale. Remember income is taxed twice with a company (assuming you extract profit).

OP posts:
Original poster
Pavementworrier · 31/12/2025 09:01

Floatingdownriver · 31/12/2025 08:53

Are you PLC?

Do you mean am I incorporated? If so, no.

OP posts:
Floatingdownriver · 31/12/2025 08:53

Are you PLC?

Fleur405 · 31/12/2025 08:53

Sounds like you should be running your business through a company - much more tax efficient.

BishyBarnyBee · 31/12/2025 08:51

Surely if you needed premises that would count as a cost so wouldn't actually affect your tax load?

You have the same dilemma as anyone coming into the higher tax threshold and it's a privileged problem to have.

Chemenger · 31/12/2025 08:51

So instead of keeping ~55% (I don’t know what the tax rate is) of your additional income you would prefer none? Fair enough.

PhantomAfternoonTea · 31/12/2025 08:49

It's effectively your second job, so of course you're going to be highly taxed on additional income. Confused

Floatingdownriver · 31/12/2025 08:49

It’s hugely frustrating but there are legitimate ways to limit your liability. Follow ‘accountant she’ on instagram

randomchap · 31/12/2025 08:47

So you're happy to lose that income? If the business is viable why don't you sell it instead of shutting it down?

Have you talked to an accountant about how to reduce your tax legally? Dividends etc?

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