March can be a hectic month for business owners and the self-employed. With the tax year end creeping up on you, you might feel overwhelmed with double checking you have your tax affairs in order by the 5th of April. These stresses may even take the focus off of other areas of your business, creating further stresses down the line.

Tax planning is often focused on the end of the tax year, however, there is a case to be made for ‘year beginning planning’. For example, you may be able to save tax over the year by rearranging ownership of investments with your spouse or civil partner in April. Similarly, if you place funds in an Individual Savings Account (ISA) or a pension at the start of the tax year, you will avoid having to consider any income or CGT on that element of your investments for the rest of 2024/25.

There is more you can do throughout the tax year to ease the strain this time next year:

Know your allowances

The start of the new tax year will see many allowances and tax bands frozen once again. In reality, these freezes are tax increases as the government has effectively allowed inflation to determine how much greater a proportion of your income and estate should pass to the Treasury. Had the allowances and bands all been increased in line with inflation, then they would be rising by 6.7% for 2024/25, using the standard yardstick of the Consumer Price Index (CPI) inflation to the previous September.

However, not all elements of the tax system are frozen:

• The dividend allowance will halve again to just £500, a tenth of the level at which it started life in 2016/17.
• The capital gains tax (CGT) annual exemption will also halve, to £3,000, the same level as in 1981/82.
• If you are self-employed, you will pay income tax on the profits you make in the tax year rather than across your financial year. You may also be paying an element of extra income tax because of the spreading of profits in the 2023/24 transitional year.
• The pensions lifetime allowance (£1,073,100 generally) will disappear from 6 April 2024. However, you could be forgiven for thinking it has continued because of new restrictions on tax-free lump sum payments. In any case, the Labour Party said in 2023 that it would reinstate the lifetime allowance if it forms the new government.
• If you live in Scotland, some of your income tax bands will widen, but others will shrink. You will also gain a sixth income tax band, the 45% advanced rate band, covering non-savings, non-dividend taxable income between £62,430 and £125,140. Above that figure, the top rate will rise to 48%.

Make the most of employee benefits

Some employee benefits can be tax-efficient for you and your employees if implemented before the tax year end. Whether it’s a cycle-to-work scheme, childcare vouchers or private healthcare, these employee benefits can benefit you and your business and help you retain the best talent.

You could even offer your employees professional development as training expenses may be tax-deductible.

Review pension contributions

There are tax advantages to reviewing your own personal pension contributions and contributions you make on behalf of your employees at tax year end. Any changes you make to pension contributions could even help towards savings on NICs too.

Important dates for the 2024/25 tax year

Below are some important dates for the next tax year. Whilst they may not all be relevant to you, now is the time to put them in your calendar.

New tax year day 1 – 6 April 2024

If there are any new tax rates or rules these will usually start on the 6th of April. This year the new, lowered National Insurance Contributions rates start from this date. However, the new National Living Wage and National Minimum Wage rates come into effect slightly earlier on the 1st of April 2024.

The second payment on account due – 31 July 2024 

This one is for the self-employed – if you pay your tax through payment on account, then the second payment will need to be made by this date.

Self-assessment registration deadline – 5 October 2024

If this is your first year of being self-employed, then you must register this with HMRC by the 5th of October. You will then be given your Unique Taxpayer Reference number (UTR) which you’ll need when you file your tax returns.

Paper tax returns deadline 31 October 2024

If you choose to submit a paper tax return, then this date is for you. However, if you miss the deadline, you’ll have to submit an online return instead by the 31st of January 2025.

Online tax returns deadline – 31 January 2025

Online tax returns must be submitted by the 31st January 2025 for 2023/24 by this date. This is a deadline, meaning that you can submit your tax return anytime from 6th April 2024, however, if you do submit your tax return after the 31st January you will be facing paying a fine.

Disclaimer

Tax treatment varies according to individual circumstances and is subject to change.

The Financial Conduct Authority does not regulate tax advice.

We recommend seeking professional advice from one of our financial advisers.