As the end of the tax year approaches, it’s a good time to pause and review your finances. A little preparation before 5 April can make a real difference to your tax position and help you avoid unnecessary stress later.
Whether you run a limited company or operate as a sole trader, taking a proactive approach now can ensure you use available allowances, tidy up your records and prepare for the new tax year with confidence.
Below is a practical checklist to help you make the most of the weeks leading up to the tax year end.
Review Your Expenses and Claim What You’re Entitled To
One of the simplest ways to reduce your tax bill is to make sure you are claiming all allowable business expenses.
These may include:
• Office supplies and software
• Professional fees and subscriptions
• Travel and business mileage
• Marketing and advertising costs
• Mobile phone and internet costs used for the business
Make sure all expenses have been properly recorded and that receipts are available where needed. Missing expenses means paying more tax than necessary.
For directors of limited companies, this is also a good time to check whether any personal expenses paid on behalf of the business should be reimbursed before the year ends.
Consider Pension Contributions
Pension contributions remain one of the most effective and tax-efficient ways to reduce your tax bill.
For limited company directors
Employer pension contributions made by your company are normally treated as a business expense. This means your company receives corporation tax relief, while you benefit from growing your pension in a tax-efficient environment.
For sole traders
Personal pension contributions can reduce your tax liability, if you have profits attracting higher rate tax.
If you have available profits, a pension top-up before 5 April can be a smart way to support both your future retirement and your current tax planning.
Plan Your Dividends Carefully
For limited company directors, reviewing dividends before the tax year ends is an important step.
Consider:
• Whether you have used your dividend allowance
• Your current income tax band
• Whether additional dividends this year would be more tax efficient than waiting until next year
Dividends must be properly declared and documented, so make sure meeting minutes and dividend vouchers are prepared and recorded correctly.
A quick review now can help ensure you are extracting profits from your company in the most efficient way.
Review Planned Asset Purchases
If your business needs new equipment, vehicles or machinery, it may be worth considering whether to make the purchase before the end of the tax year.
Capital allowances may allow your business to claim tax relief on qualifying assets.
Typical examples include:
• Computers and office equipment
• Tools or machinery
• Business vehicles
• Software systems
Timing can make a difference, so it’s worth reviewing planned purchases before the year closes.
Write Off Bad Debts Where Appropriate
If you have invoices that are unlikely to be paid, you may be able to write them off as bad debts.
Removing unrecoverable debts from your accounts can reduce taxable profits and give a more accurate picture of your business finances.
Before writing off a debt, make sure reasonable steps have been taken to recover it and that proper documentation is kept.
Check Your Record Keeping
Good record-keeping is essential for both tax compliance and smooth financial management.
Before the tax year ends, take time to ensure:
• All invoices and expenses are recorded
• Bank accounts are reconciled
• Dividend documentation is complete
• Payroll records are accurate
• Your bookkeeping system is up to date
If you are preparing for Making Tax Digital changes in the future, keeping digital records now will make the transition much easier.
Don’t Leave Planning Until January
Many people only think about tax planning when the Self Assessment deadline approaches in January. By then, most opportunities to reduce your tax bill have already passed.
Taking action before 5 April gives you more flexibility and helps ensure you make the most of available allowances.
We’re Here to Help
Every business is different, and the right approach depends on your circumstances. A quick year-end review can often highlight opportunities you might otherwise miss.
If you would like help reviewing your accounts, planning dividends or making sure everything is in order before the tax year closes, we’re here to help.
We support business owners across Stevenage and Hertfordshire with clear, practical advice so they can focus on running their business with confidence.
Get in touch today and let’s make sure you finish the tax year in the strongest possible position.
Want to know more?
You can contact Hammond-Barr accountants on 01438 281281 or via email at [email protected].
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