Plan to save on your tax bill
If you’re a sole trader or in a business partnership, now that the dreaded January tax deadline is out the way, it is time to turn your attention to the end of the 2025/26 tax year (5th April 2026).
If you can forecast your income for the year 6th April 2025 to 5th April 2026, this can allow you to put tax saving strategies in place and save some cash. So it’s time to get the calculator out and take a look at the records for the last year, and your projections for the next couple of months.
Strategy 1: Pension
If you are a higher rate taxpayer, you can pay into a private SIPP. This will extend the basic rate tax band by the grossed up pension contributions which saves tax at 20% on this amount.
If your income will exceed £100K in the tax year, a contribution into your SIPP can also have the effect of restoring part or all of your personal allowance.
Strategy 2: Reducing payment on account
The other advantage to forecasting your income is if your income is lower for 2025/26 than 2024/25, you can look to reduce the second payment on account for 2025/26 which is due by 31st July 2026. That means that cash stays in your bank account, and not HMRC’s.
Strategy 3: Investing in your business
If you’ve got plans to purchase capital equipment – like new machinery or tools, IT equipment or other items that will benefit your business, do it before the end of March, so that can be offset against your profits.
Strategy 4: Get some help
If you’ve been thinking about getting someone to help with your business, whether that’s a member of staff, a contractor or outsourcing to an agency, now is a good time to do that, as it will reduce the overall profits for the remaining month or so, and will also bring next year’s tax bill down a bit, while making your business more productive and efficient.
Don’t put these strategies off – get that calculator out right now. And, if you’re already prepared for Making Tax Digital (MTD) and you’re already using accounting software, that’s going to make reviewing your figures a whole lot easier! Get in touch with our expert team today if need any assistance with saving on your tax bill!
