Year-End Tax Planning: How to Reduce Your Bill Before It’s Too Late

As the financial year draws to a close, it’s the perfect opportunity to review your accounts and take proactive steps to minimise your tax liability. Effective year-end tax planning not only reduces your bill but also helps you make the most of available allowances and reliefs. Here’s what business owners and individuals should consider before the deadline arrives.

Make Use of Allowances and Reliefs

Each year, taxpayers are entitled to various allowances that can significantly reduce their tax bill. For individuals, this includes the Personal Allowance and the Dividend Allowance, while businesses may benefit from the Annual Investment Allowance on qualifying assets. By making full use of these allowances before year-end, you ensure no opportunity goes to waste.

Review Pension Contributions

Pension contributions are one of the most effective ways to reduce taxable income. Contributions receive tax relief, meaning you could lower your overall tax liability while also boosting your retirement savings. If you haven’t already maximised your annual allowance, consider making additional contributions before the year-end.

Accelerate or Defer Income and Expenses

Timing can make a big difference to your tax position. If possible, you may choose to defer income to the next tax year or bring forward deductible expenses into the current year. This strategy can help smooth out your tax liability and ensure you take advantage of current allowances and rates.

Consider Capital Gains

If you are planning to sell investments or assets, review the timing carefully. Everyone has an annual Capital Gains Tax allowance, and making disposals before year-end may allow you to use this exemption efficiently. Spreading disposals across tax years can also reduce your overall liability.

Take Advantage of Business Reliefs

For companies, there are specific reliefs such as Research and Development (R&D) tax credits or enhanced deductions for certain capital investments. Your accountant can advise whether your business qualifies and how best to claim these reliefs.

Final Thoughts

Tax planning should never be left until the last minute. By taking action before the financial year closes, you can significantly reduce your tax bill and improve your financial position. An experienced accountant will help you navigate the rules, highlight opportunities, and ensure compliance. Acting early gives you peace of mind and allows you to focus on growing your business in the year ahead.