Tax year end as a business owner: Your indispensable checklist
Last year’s Autumn Budget brought significant changes to the tax landscape for business owners, with many of those changes due to come into force at the start of the new tax year (6 April).
It’s important to understand how these new rules, rates, and thresholds might affect your business in 2025 and beyond. But you’ll want to ensure your personal finances are as tax-efficient as possible too.
Keep reading for a look at the simple steps you can take now in the run-up to 6 April, to manage your personal finances and your business, and set you up for a prosperous 2025/26.
1. Focus on your pension and the tax efficiencies it offers
The money you contribute to your pension sits within a tax-efficient wrapper. To make the most of the tax efficiency your pension offers, you’ll need to understand the Annual Allowance that applies to you.
The pension Annual Allowance is the amount you can contribute to your pension tax-efficiently during a single tax year. It includes personal and employer contributions, as well as tax relief, and for 2024/25 it stands at £60,000 (or 100% of your earnings, if lower).
Check in with your contribution history to see how much allowance you have left and consider making top-ups in this tax year if you can afford to.
Remember too that the Annual Allowance that applies to you might be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension. The Money Purchase Annual Allowance and the Tapered Annual Allowance could both reduce your allowance to just £10,000.
Exceeding this amount could mean you face an additional tax charge so seek advice before making top-ups if you aren’t sure which allowance applies to you.
2. Your ISAs are incredibly tax-efficient so make the most of your ISA Allowance
The ISA Allowance for 2024/25 is £20,000, spread across all the ISAs you hold (although the Lifetime ISA allowance is lower).
You don’t pay tax on Cash ISA interest, while returns on your Stocks and Shares ISA are free of Capital Gains Tax (CGT) and Income Tax. Consider making the most of this tax efficiency before 6 April, if you can afford to.
Remember too that unused ISA Allowance can’t be carried forward so if you don’t max out your subscription this year, the unused amount will be lost.
3. Tax-efficient “giving while living” could have long-term IHT benefits
If you worry that the value of your estate will leave an Inheritance Tax (IHT) liability after you’re gone, you might consider using certain HMRC exemptions during your lifetime.
The annual exemption, for example, allows you to gift up to £3,000 each tax year, IHT-free. The allowance applies only to you and can be carried forward for a year. This means that if you and your partner failed to use your exemption last tax year, you could gift up to £12,000 between you, tax-free, before 6 April 2025.
4. Consider the timing of personal and business disposals
When the chancellor announced changes to the main rates of CGT back in October 2024, the changes were effective immediately. While the rumours rate increases forced some to make asset disposals earlier than planned, if you held onto your assets, there are still ways to make a future disposal as tax-efficient as possible.
While the basic and higher rates of CGT increased (from 10% to 18% and 20% to 24%, respectively), your Annual Exempt Amount remained unchanged. It stands at £3,000 for the 2024/25 tax year and represents the amount of profit you can make on a sale before CGT becomes payable.
Expert advice could help you to think about the size and timing of disposals – by splitting a sale in half and spreading it over two tax years, say. You might also consider a transfer to a spouse or civil partner to make use of their Annual Exempt Amount.
As a business owner, you’ll also be aware of changes to Business Asset Disposal Relief (BADR) – formerly Entrepreneurs’ Relief. Rachel Reeves chose to maintain the lifetime limit at £1 million and opted against an immediate rate rise. Currently 10%, BADR will rise to 14% on 6 April. It is due to rise again (to 18%) on 6 April 2026.
Professional financial advice could be instrumental in helping you make tax-efficient disposals that mitigate rises to BADR.
5. Your employer National Insurance rate is set to rise from 6 April
One of the headlines of the chancellor’s Autumn Budget was confirmation of a predicted rise to employer National Insurance contributions (NICs).
The rate of National Insurance (NI) you pay as an employer will increase by 1.2% from 6 April to 15%.
The threshold at which you begin to pay NI was also dropped, from £9,100 a year to £5,000 a year, effective 6 April 2025. This threshold will then be frozen until 6 April 2028, after which it will rise in line with the Consumer Prices Index (CPI).
These reforms are expected to raise £25 billion a year by the end of 2029/30 but advice could help you to mitigate the rise. Last month, you might have read our blog, ‘3 reasons to put a salary exchange scheme in place now’ in which we broke down the benefits and cost savings of adopting salary sacrifice.
We can help you weigh up the pros and cons of this type of scheme for your business and explore other ways to mitigate the NI rise.
Get in touch
With tax year end approaching and changes to personal tax thresholds and employer NI rates imminent, now is the perfect time to get your finances in order. Contact us now to talk about what we can do for you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pension Regulator.