Tax season. Two words that can send shivers down the spine of any business owner. Whether you’ve been through it before or this is your first rodeo, getting your taxes in order can feel daunting. The paperwork, the deadlines, the ever-changing regulations. It’s a lot. But don’t worry, you’re not alone in this.
Running a business in the UK means tax obligations come with the territory, but with the right approach, you can navigate this season smoothly. Let’s break it down into practical steps so you can stay compliant, avoid unnecessary stress, and even uncover opportunities to save money.
Know Your Deadlines (and Don’t Miss Them!)
This might sound obvious, but missing a tax deadline can lead to penalties that are completely avoidable. Depending on the type of business you run. Sole trader, partnership, or limited company. The deadlines will vary.
- Self Assessment Tax Return: If you’re self-employed or a sole trader, here’s the golden rule—31 January. That’s when your online Self Assessment is due, and if you miss it, HMRC slaps you with an immediate £100 penalty.
- Corporation Tax: Limited companies usually need to calculate and pay Corporation Tax within nine months and one day after their accounting period ends. Filing your Company Tax Return (CT600) is required within 12 months.
- VAT Returns: If you’re VAT-registered, your returns are due quarterly. Keep an eye on your deadlines, as late payments could lead to surcharges.
The easiest way to keep track? Set calendar reminders well in advance or use accounting software that nudges you when deadlines are approaching. Trust me, your future self will thank you.
Keep Those Records in Shape
Ever found yourself frantically searching for receipts when tax season rolls around? You’re not alone. Good record-keeping is one of the simplest ways to make tax season less of a headache.
HMRC requires businesses to keep financial records for at least six years. This includes invoices, receipts, bank statements, and any documents showing business income and expenses. Digital tools like Xero, QuickBooks, or FreeAgent can help keep everything organised, reducing the chances of losing vital information.
A personal tip? Make it a habit to update records monthly. It’s far better (and less panic-inducing) than trying to piece everything together in January.
Take Advantage of Allowable Expenses
Nobody wants to pay more tax than necessary. Understanding what you can claim as a business expense can make a real difference in your tax bill.
HMRC allows deductions for any expenses that are “wholly and exclusively” for business purposes. Some common ones include:
- Office rent, utilities, and equipment
- Travel costs (excluding commuting)
- Professional fees (accountants, solicitors)
- Marketing and advertising
- Business insurance
Home-based businesses can claim a portion of household bills, and if you use your personal car for work, mileage deductions apply. The key is to keep proof. Receipts, invoices, mileage logs. So you can justify your claims.
Stay on HMRC’s Good Side with Tax Digitalisation
Making Tax Digital (MTD). If you haven’t embraced it yet, now’s the time. This HMRC initiative aims to modernise tax reporting, requiring businesses to keep and submit records digitally using compatible software.
- VAT-registered businesses (above the £85,000 threshold) must already follow MTD rules.
- Self-employed individuals and landlords earning over £50,000 will need to comply starting April 2026, with those earning over £30,000 following in 2027.
Switching early to software like Sage or QuickBooks can help you comply without last-minute scrambles.
Don’t Overlook Pension Contributions
Contributing to a pension scheme isn’t just good for future you. It’s also tax-efficient. As an employer, you must provide a workplace pension under auto-enrolment if your employees meet certain criteria. Contributions are tax-deductible, reducing your Corporation Tax bill.
If you’re a director of a limited company, directing company profits into a pension rather than taking them as salary can be a strategic way to cut tax liability. Speaking with a financial advisor can help tailor a pension strategy that benefits both you and your business.
Seek Professional Help When Needed
Taxes can be tricky, and HMRC doesn’t make everything crystal clear. If your tax situation is complex, working with an accountant can be a game-changer. A good accountant not only ensures compliance but can also help you uncover tax-saving opportunities.
An accountant once helped a friend of mine identify an overlooked R&D tax credit. Something they hadn’t realised their company qualified for. The result? A five-figure tax refund. That’s the kind of win every business owner wants.
Stay Proactive, Not Reactive
Tax season doesn’t have to be a last-minute scramble. Getting ahead of the game by tracking income, keeping receipts, and setting aside tax money can spare you major stress. It also prevents the nasty surprise of an unplanned tax bill.
If you’re feeling overwhelmed, take a breath and tackle one task at a time. Taxes may not be the most exciting part of business ownership, but handling them efficiently frees up your energy for what really matters. Growing your business.
Are you looking for a reliable accountant or want recommendations on digital tax tools? Feel free to share your experiences or ask questions in the comments!