As the new tax year approaches, businesses and individuals should take the time to review their financial position and ensure they’re making the most of available allowances and reliefs. Good tax planning isn’t just about compliance – it’s an opportunity to reduce your liabilities and keep more of your hard-earned money.

With several tax changes coming into effect, particularly around national insurance and business tax reliefs, now is the perfect time to get ahead. This guide outlines key actions to help you prepare, from claiming allowances to managing expenses effectively.

National insurance contributions

In her first Budget statement, Chancellor Rachel Reeves announced some major changes to national insurance (NI), with employer NI contributions increasing from 13.8% to 15% from April 2025. Meanwhile, the payment threshold will decrease from £9,100 to £5,000, bringing many businesses into the tax.

You should therefore ensure that you claim the full value of the employment allowance, which will increase from £5,000 to £10,500 from April. The allowance allows businesses to reduce their NI liability, so the rise is some good news – especially for small businesses.

Other tax-free allowances

It’s important to claim all your tax-free allowances, as they’re a simple way to reduce your tax bill and HMRC won’t apply them for you. There are several such allowances available to you, including the following.

• Personal allowance: Sole traders and partnerships can protect the first £12,570 of their income from income tax if they claim the allowance. Companies, which pay corporation tax, do not benefit from any such allowance.

• Capital gains tax allowance: If you or your business makes a profit when selling an asset or property, you may have to pay capital gains tax on the value of the asset that exceeds £3,000. This is the capital gains tax allowance but, again, it is not available to companies.

• Dividend allowance: If you receive income from shares in a company, you can earn up to £500 in dividends tax-free in the 2024/25 tax year. Any dividends above this threshold are taxed at different rates depending on your income tax band.

Tax reliefs

Depending on your business, there are several tax reliefs that you may be able to claim to reduce your tax bill. For example, if you’re registered for VAT, you can reclaim the VAT that your business pays on expenses. While you only have to register if your turnover is above £90,000 a year, being able to reclaim your VAT like this can be extremely beneficial.

You may also be able to claim research and development (R&D) tax credits. Available to companies involved in innovative projects in science and technology, you can claim a tax credit on a portion of your R&D costs, including staff wages.

Claim the value of your expenditure

Businesses can also claim the value of their expenses against the pre-tax profit, which lowers their tax bill. There are two types of expenditure.

• Allowable expenses: You can deduct the value of day-to-day expenses (allowable expenses) from your pre-tax, reducing the tax you ultimately owe to HMRC.

• Capital expenditure: Companies can claim capital allowances on certain purchases or investments, such as equipment, machinery and business vehicles.

Strong tax practices

By claiming your allowances and reliefs, you can significantly lower your tax bill – just make sure to adopt robust practices to stay on top of your tax responsibilities.

• Start early: Begin by starting your tax work early. The more time you give yourself, the more able you will be to avoid last-minute stress and mistakes.
• Keep accurate records: Keep detailed and accurate financial records to support all claims for allowances, relief and expenses.
• Budget for tax payments: Make sure to regularly set aside funds to cover your expected tax liabilities. That will help you avoid cashflow issues when your tax bills are due.

Talk with us today

With the new tax year approaching, it’s a great opportunity to make sure you’re taking full advantage of available allowances and reliefs. A bit of planning now can save you time and stress down the line.

If you’re unsure about what you can claim or need assistance with getting everything in order, don’t hesitate to reach out. At Bulley Davey Wealth Management, we’re here to help ensure everything is set up right for the year ahead.