UK End of Tax Year Checklist for Small Businesses

The UK tax year ends on 5 April, and the weeks before it are your last easy chance to tidy up the year that is closing. This checklist walks sole traders, partners and company directors through the decisions, records and accountant questions worth tackling now.

UK business owners live with two calendars: the business's own financial year, which can end on any date, and the personal tax year, which always ends on 5 April. Even if your accounts close in December, the April date still matters for your income tax, payroll and allowances that reset each year.

The good news is that the jobs are mostly the same every year. Once you have a checklist, you can run it in an afternoon or two.

A quick note before we start: this is general information about UK tax admin, not tax or legal advice. Rules, rates and allowances change, so check GOV.UK for current figures and speak to a qualified accountant or tax adviser about your own situation.

Why the 5 April deadline matters for your business

The tax year end is not a filing deadline for most small businesses; returns and company accounts follow later timetables. But some decisions only count if they happen inside the tax year. After 6 April you can still report the old year, but you can no longer change what happened in it.

What resets on 6 April

• Personal allowances and tax bands. Income tax is worked out per tax year, so timing of income matters.
• Annual allowances for savings and pensions. Many have a yearly limit, and unused room may not carry forward.
• Payroll. PAYE runs on the tax year, so employers close one payroll year and open the next, with updated tax codes and thresholds.
• Dividend timing. For company directors, the date a dividend is paid decides which tax year it belongs to.

Sole traders, partnerships and limited companies

Sole traders and partners report profits through Self Assessment, now on a tax year basis, so if your accounting date is not 31 March or 5 April, ask your accountant how that affects you. Making Tax Digital for Income Tax is being phased in for some sole traders and landlords; check GOV.UK to see whether it applies to you.

Limited companies pay Corporation Tax on their own accounting period, but the directors are individuals with personal tax years. That is why the 5 April date still shapes how directors take money out of the company.

Your UK end of tax year checklist, step by step

Work through these steps in order; each one feeds the next.

1. Bring your bookkeeping up to date. Record every sale and expense up to the end of February so you are working with real numbers, not guesses.
2. Estimate your profit for the year. Add a reasonable March estimate to your year to date figures for a rough picture of your tax position.
3. Review how you have paid yourself. Total your salary, drawings or dividends so far and compare them with what you planned.
4. List planned purchases. Note any equipment, vans or tools you were going to buy soon, and check whether buying before your year end makes sense.
5. Check pension contributions. Look at what you and your company have contributed and whether there is room to do more this year.
6. Prepare for payroll year end. If you run payroll, check employee details, final pay runs and what you must send to HMRC and to staff after the year ends.
7. Gather records and receipts. File everything for the year in one place so your return is easy to prepare later.
8. Book a review with your accountant. Bring your questions and agree actions to complete before 5 April.

Paying yourself: salary, dividends and drawings

How you take money from the business is one of your biggest levers, and you can still adjust it before 5 April.

If you are a sole trader or partner

Drawings are not a business expense, and they are not what you are taxed on. You pay income tax and National Insurance on your profit, however much you draw out. So the useful question is whether you have set aside enough to pay the tax on that profit. If you have no separate tax pot yet, March is a good time to start one.

If you are a limited company director

Directors often take a mix of a small salary through payroll and dividends from profits. The right balance depends on tax rates, your other income and company profits. A few things to check:

• Has the company made enough profit after tax to pay the dividends you plan? Dividends can only be paid from available profits.
• Are dividend paperwork and board minutes in order for any dividends already paid?
• Would paying a dividend now or after 6 April change which tax year it falls into, and does that matter for you?
• Is your director's loan account in credit or overdrawn? An overdrawn account can have tax consequences, so ask your accountant how to handle it.

Equipment, allowances and planned spending

If you planned to buy equipment soon anyway, timing affects when you get tax relief. The Annual Investment Allowance (AIA) gives 100% relief on qualifying plant and machinery up to £1 million a year. That covers tools, machinery, computers and some vehicles, though cars are generally treated differently. Companies can also use full expensing for qualifying main rate assets. Relief generally applies to the accounting period of purchase, so what matters is your business's year end, which may not be 5 April.

Questions to ask before you buy

• Do I genuinely need this item now, or am I buying it only for the tax relief? Relief reduces the cost, it does not make it free.
• When does my accounting period end, and will the item be bought and in use before then?
• Will buying it now squeeze my cash flow in April and May, when other bills arrive?

Other spending to think about

Paying a genuine business expense, such as training or a software renewal, a few weeks early can move it into the year you are closing. Never spend just to cut a tax bill: spending £100 to save a fraction of it in tax still leaves you poorer.

Pensions, savings and personal allowances

For many owners, pension contributions are one of the most useful year end planning tools. Contributions can attract tax relief, and company contributions for directors may be an allowable business expense. Annual limits and carry forward rules apply, so check the current position on GOV.UK or with a financial adviser.

A few other personal items are worth a glance before 5 April:

• Tax-free savings allowances. If you use ISAs, the yearly allowance generally does not roll over.
• Marriage Allowance and other transfers. If you are eligible, check whether you have claimed.
• Charitable donations. Gift Aid donations can affect your tax position, so keep a record of them.
• Investments in young companies. If you invest in startups under SEIS or EIS, the timing of the investment affects the tax year in which you claim relief.

Treat this list as prompts for a conversation with a qualified adviser, not a to-do list on its own.

Payroll year end for small employers

If you employ anyone, including yourself as a director, you also need to close your payroll year.

• Final pay run. Make sure your last submission for the year is marked as final in your payroll software, following HMRC's guidance.
• Employee records. Check names, addresses and National Insurance numbers are correct before the year closes.
• Year end documents. After the year ends, employees should receive a P60 by the deadline HMRC sets. Check the date on GOV.UK.
• Benefits and expenses. If you provide benefits such as a company car, which is a taxable benefit in kind, you may need to report them after the year ends.
• New year updates. From 6 April, apply new tax codes and any updated thresholds and rates.

Tax year end review template

Copy this table into a spreadsheet and fill in one row per decision. The amounts below are made-up examples.

Keep the finished table and reuse its rows next year.

Records to gather before the year closes

Good records make everything after 5 April faster and cheaper. Aim to have these in one folder:

• Bank and card statements for every business account, up to 5 April or your year end.
• Sales invoices and a list of anything still unpaid.
• Purchase invoices, receipts and a list of bills you still owe.
• Records of mileage or vehicle use if you claim travel costs.
• Payroll reports, dividend vouchers and board minutes.
• Loan, lease and finance agreements, with year end balances.
• Records of equipment bought or sold during the year.
• Any letters from HMRC, including payment reminders or notices.

If you are VAT registered, VAT returns follow their own periods, so check that your VAT records match your bookkeeping.

Frequently asked questions

The bottom line

The UK tax year end is not about frantic filing. It is about making a handful of decisions while they still count: how you pay yourself, whether to bring forward planned purchases, what to put into your pension and how to close payroll cleanly. Update your books, fill in the review template and talk to your accountant before the last week of March.

Do that, and 6 April becomes a genuine fresh start, with tidy records, no surprises waiting and a clear plan for the year ahead.