Prepare Your Business for the End of the Tax Year: A February Checklist for Success

The end of the current tax year runs out on 5th April 2025. This makes February a crucial time for UK businesses. By acting now, you can maximise your tax efficiency to ensure you take advantage of all the allowances available to you and your business. 

Getting your accounts ‘in order’ can feel like the adult equivalent of having to tidy your room; a boring chore that no one likes doing! 

With this end of year business tax checklist, however, you can tick off the to-dos one by one, so you can prepare your limited company tax return with confidence. And if it still feels like an overwhelming maths problem, the team at CTT Accountancy are here to help! 

Your end of tax year checklist

Personal allowances

Everyone is entitled to earn a maximum of £12,570 personal tax-free income within any given tax year. Over and above this, there are several tax brackets for higher earners:

With these thresholds frozen for another year, it’s possible any salary increases or bonuses in the last 12 months may have pushed you into a higher bracket. 

Be especially careful if your income has moved over £100,000 as your personal allowance is reduced by £1 for every £2 over £100,000 that you receive as income. 

If you do find you now qualify for a higher tax bracket than previous years – but only just – there are tax-efficient measures you can implement to help bring your taxable income down. 

These include: 

Maximising any tax allowances – including personal savings allowances – for married couples and those in civil partnerships. If your spouse isn’t utilising their full allowance, you can share their remaining entitlement.

Maximising any pension contributions – this can provide an effective tax relief rate of up to 60% for HNWI. If you are the owner of a limited company, making pension contributions through the business is usually more tax efficient. The total amount that can be contributed tax free per year is £40,000.

Explore how making Gift Aid donations before filing your end of year tax return can give you additional tax relief on contributions.

If you have any doubts about which tax bracket best describes your current income or how to maximise your personal allowances, speak to a member of the CTT Accountancy team today for personalised end of year tax advice.

ISAs

When reviewing your personal allowances for the end of tax year, now’s a good time to look into whether any payments could be made into your ISAs to maximise your annual contributions and tax-efficient savings. 

You can invest up to £20,000 in total this tax year, with no tax on income or gains payable on your investment. 

Maximise dividend allowances

As a limited business owner, dividends are another good way of adjusting your income to make it more tax efficient. This approach ensures you make full use of your personal tax-free allowances and HMRC tax thresholds, in conjunction with any director’s salary you receive. 

The £500 tax-free allowance for all dividend tax rates remains unchanged this year for each tax bracket, at 8.75%, 33.75%, and 39.35% respectively. 

If you plan on paying yourself dividends, it’s essential you withdraw these from company profits before 5th April 2025 to be included for your HMRC Self-Assessment for the 24/25 tax year. You must also make sure your accounting records are accurate and up to date, so that dividends are only paid from company profits after accounting for Corporation Tax. 

Tax relief on investments

In addition to taking funds out of the business, now is good time to invest in business assets to make the most of your Annual Investment Allowance and any Capital Allowance benefit entitlements. 

This includes investments in plant, machinery, and equipment; development of buildings and company facilities, and company vehicles. 

Qualifying Research and Development investments are also tax deductible. Tax relief is available to support companies undertaking innovative projects in science and technology. To be eligible for R&D relief, a project must aim to achieve an advance in a field of science or technology. Be aware, though; this relief is only available to companies subject to UK Corporation Tax. 

Employee benefits and PAYE

If you have any employee end of year bonuses due, be sure to finalise these before the end of the tax year. Other non-cash gifts or rewards, such as vouchers or gift cards, are also exempt from tax and National Insurance contributions as long as certain conditions are met. 

This is also a good time to review any staff benefits schemes such as courses and training, cycle to work, or childcare support, to ensure you are making the most of your businesses’ tax-free entitlements. 

As well as staff bonuses, check and verify your PAYE records to ensure they are all in order before submitting your Full Payment Submission to HMRC and avoid any penalties or discrepancies when the tax year closes on 5th April. 

Personalised tax advice that counts

With the right software and a bit of patience, completing your end of year tax return needn’t be a headache. 

If time is limited, however, outsourcing your accounting tasks to a professional service is a wise choice. It ensures your business remains compliant and well-prepared for any tax obligations as well as allowing you to carry on with your day-to-day running of the business. 

At CTT Accountancy, we help you stay ahead of your end-of-year finances and avoid common pitfalls, such as missing deadlines, overlooking valuable allowances, or underestimating tax liabilities, which could lead to cashflow issues. 

Our accountancy experts give you personalised end of year tax advice to help you identify areas for improving efficiency while maintaining compliance. We’ll also keep you informed of any changes in tax legislation that could benefit you and your company, thanks to our partners in CTT Tax & Trust.

With our support, you can look forward to the end of the tax year with total confidence and peace of mind. Speak to a member of the CTT Accountancy team today.