It’s completely normal to start thinking about tax planning towards the end of the tax year. This is typically when the urgency increases, deadlines loom, last-minute tips circulate, and there’s a rush to “do something before April 5.” We’ve all experienced this frenzied environment. However, it’s worth asking: shouldn’t we consider tax planning at the beginning of the tax year instead? Isn’t a new tax year your best opportunity to plan?
When you take a step back, it makes much more sense. At the start of the year, there’s no rush. You have time on your side, with a full 12 months ahead to make decisions, adjust as circumstances change, and implement effective plans rather than reacting under pressure.
Life and business can get quite busy. There are many competing priorities and distractions everywhere you turn. This seems to be more so nowadays with so much going on in the global scene. As a result, tax planning often gets pushed to the bottom of the list, not because it isn’t important, but because it feels like something that can be dealt with later. However, be mindful that the new tax year can be your best opportunity to plan.
Creating a tax plan at the beginning of the year is one of the smartest moves you can make. If you start now by organising your financial goals, such as how you pay yourself, what you want to take from your business, and what you envision for the year 2026/2027. Of course, you don’t have to do everything at once. You just need a clear direction.
What’s also important this tax year is the sheer economic uncertainty. Last month, the British Chamber of Commerce (BCC) issued the first economic assessment since the conflict in the Middle East and the Spring Statement. You can read more on this here.
Working with experts can help. They can help you put a plan together, a plan that works for you and saves you tax.
What kind of tax planning can you do at the start of the New Tax Year?
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First Things First: How Are You Paying Yourself?
Let’s start with the question most business owners rarely revisit. Is the way you pay yourself still the most tax‑efficient option? Remember, things have changed in the last couple of years. With higher dividend rates, a shift in National Insurance and higher corporation tax, the old “low salary, high dividends” is not necessarily the best.
What worked last year might not be right this year. Now is a good time to look at:
- Your director’s salary.
- How much you plan to take in dividends this tax year.
- Whether pension contributions could do some of the heavy lifting instead.
A small tweak early in the year can make the numbers work harder for you over the next 12 months without feeling like you’re “doing tax planning”.
Here’s more on the best way to pay yourself as a business owner.
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Your personal allowances
Every year, business owners lose tax relief simply by not using what’s already available to them.
Think about:
- Your Individual Savings Account (ISA) allowance. ISAs are still one of the simplest ways to build tax‑free wealth.
- Pension annual allowances, especially if profits are strong, investing in pension plans can deliver nice tax savings.
- Dividend and capital gains allowances, which are now smaller than they used to be, but once the tax year ends, these are gone.
It’s never too early to start thinking about these. Sit down with your Accountant as early as you can to set out a plan, because a new year is your best opportunity to do so.
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Your business decisions are not separate from your personal decisions
One of the biggest mistakes we often encounter is treating business and personal taxes as separate entities. They are interconnected because your business goals and personal goals should align.
The tax planning you do in your business affects your personal tax position. If they don’t, it becomes challenging to ensure that you achieve what you want. Your business objectives should support your personal aspirations or at least be aligned with them.
As you start the tax year, be mindful of:
- What profits do you leave in the business? This could be deliberate due to future strategy, but you need to know.
- If you take more income out of the business than you ought to, this can lead to cashflow issues.
- What do you want to invest in assets to ensure your business keeps pace?
- Slow down or ramp up growth. How do these tie in with current tax reliefs and your overall goals?
It all flows through to your personal position sooner or later.
Don’t forget your future self.
Depending on where you are in your business and personal journey, your future self may not be far away. When running a business, it’s easy to focus solely on the current year. However, the new tax year is also a good time to consider:
- Retirement planning
- Exit or succession strategies (even if they are years away)
- Whether the business is building value as well as income
Pensions, investments, and profit retention all play a crucial role in this process. The earlier you incorporate these elements into your strategy, the smoother the journey will be.
Final Thoughts
The new tax year gives you breathing space, but only if you use it.
If you’d like support pulling together a clear plan for the year ahead, looking at both your personal position and your business strategy, now is the ideal moment to do it.
A bit of clarity upfront can save a lot of time, stress, and missed opportunities later. Call or email your normal manager, who will be pleased to help you put a plan together.
If you are not yet working with us, but could do with some help with tax planning and strategic growth, here’s more on who we help.