“My Mate Dave Doesn’t Pay That Much Tax!” Why pub talk isn’t a reliable tax strategy

We hear it all the time: “My mate Dave says he barely pays any tax.” “Dave reckons he puts everything through the business.” “Dave’s accountant told him to buy a motorbike and claim the VAT.”

Let’s get one thing straight—we love a good “Mate Dave” story. But when it comes to tax, what works for Dave might not work for you… and frankly, there’s a decent chance Dave hasn’t quite got it right either.

In this blog, we’re going to take a friendly, honest look at why comparing your tax bill to someone else’s (especially in the pub, over a pint) is not the best move—and what you should be focusing on instead.

Everyone’s business setup is different

Let’s start with the basics. Not all businesses are structured the same, and that alone can cause massive differences in how much tax you pay.

Sole trader? You pay Income Tax and Class 2/4 National Insurance on your profits.

Limited company? You might pay yourself a salary and top up with dividends, which are taxed differently—and often more tax-efficiently if done right.

Partnership? Whole other kettle of fish.

VAT registered or not? That affects how your income and expenses work too.

Trading alone or employing staff? Yep, that changes the picture again.

So if Dave is a limited company director claiming dividends and you’re a sole trader paying NICs and tax on every pound of profit… of course your tax bills will look different. Tax isn’t one-size-fits-all.

Three (fictional but familiar) Daves

Let’s look at a few scenarios, because examples help bring this to life:

🔹 Sole Trader Sarah

Sarah’s a self-employed graphic designer. She brings in £45k a year, has minimal expenses, and isn’t VAT registered. She pays income tax on her profits, plus National Insurance. Her tax bill? Around £8,000 per year.

🔹 Limited Company Dave

Dave runs a plumbing business. He set up a limited company, pays himself £12,570 in salary and £30,000 in dividends. Because dividends are taxed differently, he pays less income tax and NICs. His company also pays 25% Corporation Tax on profits. His personal tax might look lower than Sarah’s—but it’s not apples to apples.

🔹 “Creative” Carl

Carl tells everyone at the pub that he writes everything off. Meals out, holidays (sorry, ‘research trips’), even his dog’s grooming. “Just whack it through the business,” he says. The thing is, Carl hasn’t had an HMRC enquiry—yet. If (when) that happens, he might be in for a nasty surprise.

What can you claim legitimately?

This is where things get interesting—and where the right advice can help you keep more of your money.

✅ Business expenses: These must be “wholly and exclusively” for your business. That includes tools, stock, mileage, and software—but not your weekly Nando’s, unless you’re running a restaurant review blog.

✅ Use of home: If you work from home, you may be able to claim a portion of your bills. HMRC allows simplified flat rates, or you can go more detailed.

✅ Working from home allowance: Employees can sometimes claim too—different rules apply.

✅ Capital allowances: For bigger purchases like vans, machinery, even office furniture—these can be offset against your profits.

✅ Tax-efficient withdrawals: If you're a limited company director, a well-balanced mix of salary and dividends can reduce your tax exposure legally.

Want to know what you can and can’t claim? That’s where we come in. (But more on that later.)

But what about VAT?

Another classic “Mate Dave” moment: “Dave says you should register for VAT ASAP – then you can claim everything back.”

The truth? VAT registration can help, but it’s not always the right move, especially if your customers aren’t VAT registered themselves (e.g., in B2C settings like beauty or hospitality). It depends on your turnover, your industry, and your customer base.

Oh, and claiming VAT back? Only works on legitimate business expenses, not your family Netflix subscription.

The importance of good advice

Let’s be clear: Some Daves out there have clever accountants who genuinely help them pay less tax within the rules. And that’s great. But the rest? They might be skating on thin ice. That’s why speaking to a real-life human who understands your business—not just your mate’s business—is the best way to go.

So… should you ignore your Mate Dave?

Not entirely. Dave might have picked up a useful tip or two—but you need to check whether it actually applies to your business.

If you’re sat wondering:

• Am I missing out on tax savings?

• Should I go limited?

• Could I be claiming more?

• Is Dave actually committing tax fraud?

…then you don’t need pub advice—you need professional guidance.

How we can help...

At Bay Bookkeeping Solutions, we help people like you every day figure out what’s best for your setup. Sole trader? Limited company? Not sure what’s deductible or when your next return is due? We’ve got your back. We can help with:

• Bookkeeping and real-time support

• VAT and CIS returns

• Payroll

• Self Assessment and tax planning

• Giving you a reality check when Dave’s advice gets too spicy

And because we work with a qualified accountant, we can offer full support from bookkeeping to tax filing and everything in between.

Final thought

Don’t let “Mate Dave” be your financial guru. He might mean well, but your business deserves advice that’s tailored, compliant, and based on facts—not pub rumours.

If something you hear sounds too good to be true, chances are… it probably is.