With the end of the tax year fast approaching, it’s time to check if you can grab some of the last minute tax savings on offer. The team at Heelan Associates have put together some ideas to help save you those extra pounds.
We’re primarily talking to small business owners in this article, but there are also tips for personal tax at the end which apply to most other UK taxpayers.
Here’s our checklist with ‘how to’ notes below!
COMPANY TAX
✔️Gather and update your records!
✔️Consider bringing forward any investment in new equipment or other items you may need in the coming months.
• SOLE TRADERS
✔️If you are a sole trader using the ‘cash basis’ method of completing your tax return, consider bringing forward expenditure you were already going to be doing in the coming months.
✔️Think about if you now need to be reporting quarterly under the new ‘Making Tax Digital’ rules.
• LIMITED COMPANY OWNERS
✔️Review if you’ve used your trivial benefits allowance.
✔️Review your director’s payroll.
✔️Ensure you’ve used your £500 dividend allowance if you are the business owner.
PERSONAL TAX
✔️Gather and update your records!
✔️Consider using your Capital Gains annual allowance.
✔️Make use of your personal tax-free allowance.
✔️Make any gift aid donations.
✔️Consider if marriage allowance is appropriate and usable.
✔️Consider ISA allowances and other tax-relieving investments.
✔️Consider gifting excess money.
✔️Review any Child Benefit claims.
✔️Consider if you need to make any pension contributions.
✔️Think about if you now need to be reporting quarterly under the new ‘Making Tax Digital’ rules if you are a landlord.
COMPANY TAX
Review and record your expenses
Whenever clients ask us “What’s the best way to save tax?”, our answer inevitably starts with ‘Keep good records’. All too often, we see companies and sole traders losing valuable tax deductions through poor record keeping.
Key to good record keeping is tracking expenses. Make sure you’ve captured and recorded all of your expenses, right down to the last mile or paperclip. And do it NOW. If you put it off until later in the year, you may not remember everything, or (worse) not remember where you put the receipts for expenses so you wouldn’t forget about them!
It’s also a good opportunity to review what you’ve spent on items that otherwise you may not account for day to day, such as costs you’ve paid personally, car mileage, sundries, etc.
You can build a record-keeping habit by using a phone accounting app where you just take a photo of a receipt. The app software helps categorise and record them in the cloud, so they are both recorded and sorted with a single click. Getting into this habit of “spend and snap” could save you many hours of sorting through paper receipts for your accounts each year.
Time for a spending spree?
First of all, two key points:
- This tip applies mainly to business owners with a financial year that ends on 31st March.
- It is also about spending on items you need, not just spending to use up an allowance. Never spend money JUST to save tax. (Read our blog on how tax deductions work to understand what we mean by this.)
If you are already considering investing in new equipment in the next few months, you might want to bring forward that expenditure into this current tax year.
- This is to bring that expenditure this side of the ‘tax line’ which is drawn at the end of your business tax year.
- Your next tax bill will be calculated from figures up to and including that tax year end date (31st March).
Your annual tax bill is based on your profits for the year. Bringing forward expenditure on items such as equipment will impact these profits, reducing them and therefore reducing your next tax bill!
Pensions contributions
If you are a limited company owner, your company can contribute to your pension rather than topping it up personally. This might be more tax efficient, but is highly dependent on your own circumstances. See also our advice on topping up your pension personally. You should seek professional financial advice from someone you trust such as your IFA on this matter.
SOLE TRADERS
Cash basis tax saving
If you prepare your tax return under the ‘cash basis’ (where you record your expenses based on what your spent in the year), then bringing forward other expenditure may also help reduce your profits, and therefore your tax bill.
LIMITED COMPANY OWNERS
Review your Director’s salary
If you are a limited company owner/director, you should review your PAYE (Payroll) salary. To save tax, you will need to have it set at the most efficient level.
To find that level, you need to check:
- Are you earning enough to get a qualifying year for your state pension? (Hint: you need to earn sufficient so that you don’t have to ‘buy’ NI contributions later.
- Have you used all of your personal tax-free allowances efficiently?
- Are you declaring any salary at all? (If you’re unsure, have a read of our blog on the subject of directors payroll)
All of this does depend on your individual circumstances, but your accountant should be able to answer your questions on this. (If not, we can help – see the end of this article on how to get in touch.)
Make decisions on dividends
In the financial year, limited company owners (currently) have access to some tax-free dividends. That is, of course, providing your company makes the profits to pay actually dividends to you!
Dividends are not as generous tax-wise as they used to be, and the allowance is currently a modest £500, but even that can still reduce your tax bill. Timing is crucial, so it’s important to consider the following before 5th April if:
- You want to declare one or more dividends, as this is a ‘use-it-or-lose it’ allowance for each tax year.
- Receiving additional dividends before the end of the tax year may actually be beneficial for you. If you are not using your ‘basic rate’ dividends to the maximum amount, and aren’t currently earning around £50,000, you may still be leaving money on the table.
Using your basic rate band is particularly important going into the 26/27 tax year. On 6th April 2026, dividend tax rates are increasing by 2%. So it is well worth considering paying tax on additional dividends now, while the tax rate is cheaper.
Trivial benefits allowance
If ever there was a benefit that business owners get confused about, it’s probably this one! Trivial benefits are small gifts for you or your team that you buy for under £50. It mustn’t be a reward for reaching a sales target (for example), and it mustn’t be regular, like a membership. Think more like a random doughnut Tuesday.
As a director you are capped at £300 per tax year. Small gifts to your team are often uncapped so long as each gift does not cost more than £50, of course.
Your company can get a corporation tax deduction, and if you are VAT registered you can often recover the VAT. So, review if you’ve used your allowance, or click here to read more about ‘trivial benefits‘.
PERSONAL TAX
Keep good records
Keeping good records is just as important for personal tax as for your business. Otherwise crucial allowances might slip away and the wrong purchase at the wrong time potentially push you over your limits. Here’s how…
Selling ‘Big Stuff’
Capital Gains Tax, aka CGT, generally kicks in when you are selling large value items or certain investments that have accrued in value since you bought them. These are known as ‘capital’ items and include:
- Cryptocurrency
- Investment properties (but not your primary home)
- Shares
You have a yearly tax allowance that you can offset against your CGT ‘gains’. So If you want to sell one or more of the above in the near future, consider disposing/selling of at least one of them before the end of the tax year. Selling stuff either side of the tax year date could be efficient as you can effectively use two allowances.
As with most allowances these days, the current Capital Gains allowance has already been cut down to just £3000. Crucially, this allowance cannot be carried forward, so it’s another ‘use it or lose it’ scenario.
Make use of your personal tax-free allowance
Every person in the UK has a personal tax-free allowance. This is the amount of income you are allowed to receive before income tax needs to be paid. For the current tax year that’s £12,570, and this level is currently frozen despite wage rises and inflation over recent months.
Be aware that your personal allowance may reduce if you earn over £100,000 a year. Your personal allowance decreases by £1 for every £2 that your adjusted net income (https://www.gov.uk/guidance/adjusted-net-income) is above £100,000.
Use investments to reduce tax
There are certain types of investments that attractive great tax relief, such as:
- The Seed Enterprise Investment Scheme (SEIS)
- Enterprise Investment Scheme (EIS)
- Venture Capital Trusts (VCTs)
The tax relief for investing in companies qualifying for these schemes can provide 30-50% tax breaks, and potential further reliefs from tax when you sell the investments. The downside is they are viewed by many as high-risk investments. So this is definitely one to speak to your financial advisor about, as generally they are only suitable for experienced investors.
Gift Aid donations
If you have any outstanding charitable donations you want to make, be sure to make them before 5th April 2026. Gift Aid is a government scheme that allows charities to reclaim basic rate tax (20%) on donations from UK taxpayers. This often includes items you give to a charity shop or membership of charities such as the National Trust.
When you donate, you’ll need to make a Gift Aid declaration and have paid sufficient Income Tax or Capital Gains Tax, so that the charity can then claim Gift Aid.
If you are a higher rate taxpayer this can save tax for you if you include it on your annual tax return. See the Gov website for more details on Gift Aid.
Married? It might be tax efficient….
Married couples and those in a civil partnership can save around £250+ a year in tax. When the circumstances are right, you can ‘transfer’ some of your tax-free personal allowance to your other half, or vice versa.
However, there is a catch. (Isn’t there always?) The Marriage Allowance cannot apply if either one of you is paying higher rate tax. Also, the benefit of this allowance can vary wildly, depending on what you each earn. So please do the maths and/or seek advice before applying for this. You can apply for the Marriage Allowance online at the Government website.
Maximise your savings and investments in an ISA
Most people can earn at least £500-£1,000 of interest a year, tax-free. If your savings are likely to earn more interest than this, putting savings into an ISA may be better because you do not pay tax on any interest. Do bear in mind that the current annual contribution limit for a cash and/or stocks and shares ISA is £20,000 total per tax year. Currently, you can put the full £20k into a cash ISA if you wish.
However, from 6 April 2027, the annual Cash ISA limit for those under 65 drops to £12,000, whilst the overall £20,000 ISA allowance remains the same. The remaining £8,000 can be used in stocks and shares or other ISA accounts. If you’re approaching retirement, the good news is that anyone aged 65 and over keeps the full £20,000 cash ISA allowance.
Gifting excess money
If you are lucky enough to have cash to spare, consider gifting cash to your loved ones. You can gift up to £3,000 per year (at the time of writing) by using your “annual exception”. Gifting within the allowance has several benefits:
- Your gift won’t be counted as part of your estate for inheritance tax (IHT) purposes
- The gift is tax-free for the recipient.
- You can give it all to one person, or split it amongst several, so long as the total does not exceed your annual allowance.
If you haven’t done this before, you can also bring forward last year’s unused annual exemption (but only for one year). This gives you a potential £6,000 to distribute.
The hidden tax consequences of Child Benefit
Child Benefit is not a taxable income as such, but it does have consequences for your tax return at certain earnings levels.
If you or your partner are likely to receive more than £60,000 in income and are currently receiving child benefit, you could be subject to the High Income Child Benefit Tax Charge.
Once you earn £80,000+, depending on your level of income, you could end up repaying all of your child benefit. If so, you should seriously consider whether it is worth claiming Child Benefit at all in the coming year.
If you need to pay the charge, this will normally be dealt with through your tax return. You will have to fill in details of the money received in the tax year, so be sure to keep good records. (Did we mention this before?!)
Currently, it is technically possible for you and your partner to both be earning £49,999, and not pay the charge. However, a household with one person earning £85,000 (for example) and the other earning £0 will pay the charge.
You may still want to claim child benefit for other benefits such as National Insurance Credits, or to make sure your child automatically gets an NI number There is a way to make a claim but receive no payments – click the link for details.
Pay more into your personal pension
Whether putting money over and above your normal contributions into your pension will actually save you any tax depends entirely on your individual situation.
Talk to your financial advisor or pension company as it might work out for you for the following reasons:
- If you make personal pension contributions, you generally get some ‘tax relief’ that is added to your pension pot.
- At the time of writing, there is an annual maximum of £60,000 you can contribute into your pension for the tax year 2025/26 without triggering income tax. If you haven’t done so already, do consider this. There are various rules and caps here to consider which may reduce this limit, so always do your homework before contributing. You may be able to carry some of this forward.
- Higher rate taxpayers might get some tax back directly, but this very much depends on how your pension operates.
- If you earn between £100-£125k, there can be some extra benefits to making personal contributions.
In case you haven’t gathered already, this benefit really is dependent on your circumstances. You do need to get professional advice from someone you trust such as your accountant or your IFA/financial advisor.
Reporting your tax as part of Making Tax Digital
Making Tax Digital is a major change by HMRC to the way tax returns are completed for (currently) sole traders and landlords.
HMRC are rolling out a new quarterly, digital returns scheme known as Making Tax Digital. This is a staggered roll out that means you may or may not be enrolled from April 2026. Read our blog on Making Tax Digital to understand if you will be in the scheme this April 2026, or next year.
If you are in the scheme, you will need to act quickly to make sure you are geared up for the new submissions. That may involve new software for you or extra help from your accountant.
Make time to talk tax
This time of year may seem hectic, but it’s important to make time to talk with your accountant or financial advisor on how to make the most of any tax year end benefits that might apply to you.
If you don’t have an accountant, or feel you aren’t making the most of your tax allowances with your current accountant, we’d love a chat about how we can help.
About the author:
Dan Heelan is the Business Services Director of Heelan Associates, an accounting firm that helps small business owners across the UK start, survive, and grow.
With a background as a small business owner himself, he discovered his passion for accounting and tax early in his journey and now focuses on empowering fellow entrepreneurs with the knowledge and tools to navigate the financial side of running a business.
You can see and hear Dan in action in his regular: