The end of the tax year — 5 April 2026 — might feel a long way off. But when it comes to tax planning, leaving things until March often means missed opportunities.
For small businesses, the difference between reactive compliance and proactive planning can be substantial. Reviewing your position early allows you to reduce tax efficiently, protect cash flow and make informed decisions — rather than rushed ones.
This practical guide walks you through what to review before the 2025/26 tax year ends.
Key Dates You Shouldn’t Ignore
The tax year ends on 5 April 2026, which is the cut-off for most personal tax planning — including dividends, pension contributions and use of allowances.
If you’re a sole trader, partner or company director completing a Self Assessment return, remember that payments on account can create cash flow surprises. Your balancing payment for 2024/25 and first payment on account for 2025/26 will be due on 31 January 2026, with the second payment on account due on 31 July 2026. If profits have increased this year, those July payments may be higher than expected.
For limited companies, Corporation Tax is payable nine months and one day after your accounting year end. That can feel distant, but the liability builds throughout the year. Without proper forecasting, many directors underestimate how much needs to be set aside.
If you operate payroll, year-end reporting must also be handled correctly. Final submissions must be made by 5 April 2026, P60s issued by 31 May, and P11Ds submitted by 6 July where required. Small errors can lead to unnecessary HMRC queries or penalties.
VAT-registered businesses should also review their position before year end. Timing of expenditure, correct invoice processing and ensuring returns are accurate can all have a cash flow impact.
Review Your Profits Early
One of the most valuable exercises before the end of the tax year is reviewing up-to-date management accounts.
Too often, we see business owners making decisions based on last year’s figures. But profits can change quickly. If your bookkeeping is current, you can assess:
- Whether profits are higher than expected
- What your estimated tax liability looks like
- Whether cash reserves are sufficient for upcoming payments
If profits are significantly stronger than anticipated, this may increase Corporation Tax or Income Tax liabilities — and potentially your payments on account. Identifying this in January or February gives you time to plan. Discovering it in late March limits your options.
Good tax planning always starts with accurate numbers.
Consider the Timing of Income and Expenditure
The timing of business decisions can influence your tax position — but it must be commercially sensible.
For example, if you are already planning to invest in equipment, bringing that purchase forward before your year end could accelerate tax relief through capital allowances. Limited companies may benefit from the Annual Investment Allowance or Full Expensing, allowing qualifying expenditure to reduce taxable profits.
However, spending purely to “save tax” rarely makes financial sense. The real goal is to align commercial decisions with tax efficiency — not let tax drive unnecessary costs.
Similarly, reviewing when income is recognised (where commercially appropriate) can sometimes help smooth taxable profits between years.
Make the Most of Available Reliefs
Small and owner-managed businesses have access to several straightforward but valuable reliefs.
Employer pension contributions remain one of the most tax-efficient ways for directors to extract profit. Contributions made by the company can reduce Corporation Tax while avoiding National Insurance. For many directors, this is significantly more efficient than additional salary.
Dividend planning also deserves attention before 5 April 2026. Ensuring dividends are declared correctly, supported by sufficient reserves and aligned with personal tax bands can reduce overall household tax exposure. Reviewing this well before year end allows flexibility.
There may also be opportunities around staff bonuses or trivial benefits, provided they are structured within HMRC guidelines.
The key is to review these options in advance — not after the year has closed.
Director and Family Tax Planning
For owner-managed businesses, personal and business tax planning are closely linked.
Before the end of the tax year, it’s worth reviewing whether:
- Your Personal Allowance has been fully used
- Income is being shared tax-efficiently between spouses (where shareholdings allow)
- Pension contributions could reduce higher-rate exposure
- You may be affected by the High Income Child Benefit Charge
In some cases, a well-timed pension contribution can reduce adjusted net income and mitigate additional charges.
These are not aggressive strategies — they are sensible reviews to ensure you are not paying more tax than necessary.
Don’t Leave Planning Until March
Every year, March becomes a rush. By that stage:
- Profits may not be accurately updated
- Dividend flexibility is limited
- Pension contributions may feel reactive
- Decisions are made under pressure
Proactive businesses instead schedule a year-end review in Q4. This allows time to assess forecasts, consider reliefs and make deliberate choices.
Tax planning should support your wider business goals. It should improve cash flow visibility, reduce surprises and help you move confidently into the 2026/27 tax year.
A Practical End of Tax Year Checklist
Before 5 April 2026, you should ensure:
✔ Ensure bookkeeping is up to date
✔ Review profit forecasts
✔ Estimate Income Tax or Corporation Tax liabilities
✔ Consider pension contributions
✔ Plan dividend payments
✔ Review capital expenditure opportunities
✔ Check payroll year-end requirements
✔ Assess personal tax position
✔ Forecast cash flow for upcoming tax payments
If you can confidently tick off each of these areas, you’re in a strong position.
Proactive Support Makes the Difference
At AK Tax, we work with small limited companies, sole traders and partnerships who want more than just year-end compliance. Our focus is on proactive advice, clear forecasting and practical tax planning that protects cash flow.
We offer fixed-fee year-end tax planning meetings designed to give you clarity well before 5 April — so you can make decisions calmly and strategically.
If you’d like to approach the end of the 2025/26 tax year with confidence rather than uncertainty, now is the time to start planning.
Book your year-end tax review with AK Tax today and take control of your 2025/26 tax position before the deadline.
