Last-Minute Tax Year-End Checklist
Posted on 1st April 2025 at 21:31
As the end of the UK tax year approaches, businesses and self-employed individuals must ensure that their financial records are accurate, compliant, and ready for submission. The tax year-end is not only a key milestone in the financial calendar but also a crucial opportunity to optimise tax efficiency and prepare for the new year with confidence.
This article outlines a comprehensive checklist of tasks to complete before 5 April, helping businesses reduce the risk of errors, avoid unnecessary liabilities, and take full advantage of any available reliefs or allowances.
1. Finalise Bookkeeping and Financial Records
Accurate bookkeeping is the cornerstone of effective tax planning. Before the end of the tax year, all income, expenses, and transactions should be properly recorded, categorised, and reconciled. This includes ensuring that all bank statements are up to date and that any outstanding invoices or receipts are logged correctly.
Incomplete or inconsistent records can lead to delayed submissions, misreported income, or missed claims—each of which may result in penalties or increased tax liabilities.
Action point: Review your accounting software or ledgers and check that all financial activity from the current tax year is captured and verified.
2. Assess Allowable Expenses and Capital Allowances
It is essential to review all business expenses to ensure you are claiming everything you are entitled to. This includes travel, office supplies, utilities, professional services, and other necessary costs incurred wholly and exclusively for business purposes.
For larger investments, consider capital allowances. These allow businesses to deduct a portion of the cost of capital assets—such as equipment, machinery, and vehicles—from their taxable profit.
The Annual Investment Allowance (AIA) currently permits businesses to claim up to £1 million on qualifying expenditure (2024/25 rates), providing significant scope for tax relief.
Action point: Compile a list of all assets purchased this year and consult with your accountant to determine which qualify for capital allowances.
3. Review Directors’ Loan Accounts
For limited companies, the directors’ loan account should be reviewed before year-end. If directors have withdrawn funds not treated as salary or dividends, these may be considered loans, with specific tax implications if not repaid within a set period.
Outstanding balances on directors’ loan accounts at year-end may attract a Section 455 tax charge at 33.75%, repayable once the loan is cleared. If the balance is repaid within nine months of the year-end, the company may avoid this charge altogether.
Action point: Ensure accurate records of all director withdrawals and repayments are maintained, and consider repaying outstanding balances before the deadline if applicable.
4. Utilise Tax-Free Allowances and Reliefs
Several allowances and reliefs reset each tax year. Reviewing your use of these allowances before 5 April can identify opportunities to reduce liability or optimise savings.
These may include:
• Annual Dividend Allowance: £1,000 for the 2023/24 tax year, reducing to £500 in 2024/25.
• Personal Allowance: £12,570 for most individuals.
• Capital Gains Tax (CGT) Allowance: £6,000 for 2023/24, falling to £3,000 in 2024/25.
• Pension Contributions: Up to £60,000 per year may be contributed tax-free, depending on income.
Failure to use these allowances before the year-end may result in missed reliefs that cannot be reclaimed retrospectively.
Action point: Check if there is remaining capacity within your allowances and discuss strategies with your accountant to use them efficiently before they reset.
5. Plan Bonuses and Dividends
Owner-directors may benefit from strategic timing when it comes to bonuses or dividend declarations. Issuing payments before the tax year ends may help to take advantage of current tax thresholds and allowances.
However, it’s vital to ensure that all payments are documented correctly and supported by board minutes and accounting records. Dividends must only be paid from distributable profits, and bonuses must be processed through payroll.
Action point: Review profit figures and available reserves to determine whether end-of-year payments are feasible and tax-efficient.
6. Conduct Payroll and Benefits Review
Payroll should be reviewed to ensure all salaries, benefits, and deductions have been correctly processed. This includes reporting benefits-in-kind, such as company cars or health insurance, which must be reported via a P11D or through payrolling.
As of 6 April 2026, all employers will be required to report benefits-in-kind through payroll, but many are choosing to prepare early by adopting the system voluntarily.
Ensure that all Real Time Information (RTI) submissions have been made and that employee tax codes and National Insurance contributions are current and accurate.
Action point: Verify that year-end payroll is complete and that any final adjustments—such as salary sacrifices or new starters—have been correctly accounted for.
7. Reconcile VAT and Other Tax Accounts
VAT-registered businesses must ensure that all returns for the current financial period are submitted accurately and on time. Any errors or missed input tax claims can often be corrected in the next return, but this requires full reconciliation and documentation.
Similarly, other taxes such as Corporation Tax, Construction Industry Scheme (CIS) deductions, or R&D Tax Credits should be reviewed to confirm accuracy and eligibility.
Action point: Complete a review of your VAT account and other tax obligations to identify discrepancies, missed opportunities, or corrections before finalising submissions.
8. Review Debtors and Creditors
Year-end is an opportune time to assess your aged debtor and creditor lists. Consider whether any invoices are unlikely to be paid and whether a provision for bad debt should be made. This can have an impact on your taxable profit.
You should also check for any unclaimed expenses or supplier payments that are due, and chase up overdue accounts to improve your year-end cash position.
Action point: Write off irrecoverable debts where justified and ensure that all business-related expenses have been properly invoiced and recorded.
9. Prepare for Making Tax Digital (MTD)
Although full MTD implementation for Income Tax has been delayed until April 2026, businesses above the VAT threshold must already be MTD-compliant. Ensuring that your accounting software is up to date and compatible with HMRC’s systems is essential for avoiding future penalties.
If your business is under the VAT threshold but voluntarily registered, it is advisable to adopt MTD practices early.
Action point: Confirm that your digital records meet current MTD requirements and prepare for the wider rollout of MTD for Income Tax in the coming years.
10. Schedule a Year-End Review with Your Accountant
Perhaps the most important step is to consult with your accountant ahead of 5 April. A final review meeting can help you identify outstanding actions, explore tax-saving opportunities, and avoid costly oversights.
Professional advice ensures that your financial position is correctly evaluated and that you enter the new tax year with confidence and clarity.
Action point: Book a review meeting in March or early April to allow sufficient time for any final adjustments.
Final Thoughts
Preparing for the end of the tax year requires attention to detail and forward planning. By taking action before 5 April, you place your business in a stronger position to reduce tax liabilities, improve financial efficiency, and maintain compliance with HMRC regulations.
A thorough checklist, supported by professional advice, allows you to close the financial year methodically while laying the foundation for a productive year ahead.
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