Save money, stay compliant and plan for the future with confidence
When you’re running a small business, there’s a lot to juggle, from keeping clients happy to managing cash flow. But one area that often gets pushed to the side is tax planning. The truth is, with a bit of foresight, you can reduce your tax bill, avoid last-minute stress and keep more money in your business.
Whether you’re a sole trader or a limited company, here are our top tax planning tips to help you stay one step ahead.
💼 1. Keep Proper Records All Year Round
It might sound obvious, but accurate and consistent record-keeping is one of the most powerful tools in your tax planning kit.
Good records help you:
- Track your income and expenses
- Spot tax-saving opportunities early
- Reduce your accountant’s workload (which can lower your fees!)
- Avoid fines or queries from HMRC
Using cloud-based bookkeeping tools like Xero can help keep everything organised and up to date. We often support clients in Ipswich and across East Anglia with regular bookkeeping check-ins to make sure nothing gets missed.
🧾 2. Understand What You Can and Can’t Claim
One of the biggest tax mistakes small business owners make is either missing out on deductible expenses or claiming things they shouldn’t.
Here are just a few costs you may be able to claim:
- Business-related travel and mileage
- Mobile phone and broadband (if used for work)
- Equipment and tools
- Marketing and website costs
- Insurance, bank fees and subscriptions
We can help review your expenses and ensure you’re making the most of every legitimate deduction, while staying on the right side of HMRC rules.
📆 3. Choose the Right Accounting Method
As of 2024–25, cash basis accounting is now the default for many sole traders and partnerships. Under this method, you only pay tax on money you’ve actually received, not what you’ve invoiced but haven’t been paid yet.
It’s simpler, but it’s not always best for everyone. If you:
- Have significant stock or large expenses
- Need to borrow money and show stronger accounts
- Want more detailed financial reporting
…then you might benefit from using traditional (accrual) accounting instead. Speak to us about which method suits your business best especially if you’re planning for growth.
🏦 4. Consider Your Business Structure
Are you trading in the most tax-efficient way?
For many, starting as a sole trader makes sense. But as profits grow, operating as a limited company can bring benefits such as:
- Lower overall tax rates
- More control over how and when you take income (via salary and dividends)
- Enhanced credibility with suppliers and lenders
- Opportunities for tax planning through pensions, R&D relief and more
We’ll help you decide when (and how) to incorporate or whether a hybrid or family-run structure could offer even more advantages.
📉 5. Maximise Your Allowances and Reliefs
Every year, many small businesses miss out on valuable allowances. These include:
- Annual Investment Allowance – claim up to £1 million in qualifying equipment
- Dividend allowance – up to £500 (2025/26) tax-free for limited company directors
- Personal allowance – use all of your tax-free income band
- Capital allowances – for vehicles, machinery or building works
- Trading and property allowances – up to £1,000 each if you have side income
These change often, especially in recent budgets so having a proactive accountant is key to staying informed.
🧮 6. Plan for Tax Payments in Advance
We’ve all seen it, the dreaded last-minute panic in January.
To avoid the scramble:
- Set up a savings account just for tax
- Put aside a % of income monthly (we’ll help you estimate the right amount)
- Keep track of payment on account deadlines and VAT returns
- Speak to us early if you’re struggling, HMRC is more flexible when approached in advance
If you’re already paying by instalments, we can help make sure they reflect your current profits accurately so you don’t overpay or underpay.
👨👩👧👦 7. Get the Family Involved (Legitimately)
If your spouse or children help out in your business, consider putting them on the payroll or paying dividends but only if it’s justified by the work they do and within HMRC rules.
This can spread your family income and reduce overall tax, but it must be done properly. We regularly support clients in East Anglia with family business planning that’s both tax-efficient and HMRC-compliant.
📋 8. Book a Tax Planning Review Each Year
The best tax-saving strategies are forward-looking, not reactive.
Every year, we offer our clients a tax planning meeting to review:
- Business performance and forecasts
- Tax-saving opportunities based on changes in your life or the law
- What you should be doing now to save money in the next 12–24 months
Whether you’re looking to grow, invest or simply become more efficient, a yearly review can make a real difference to your bottom line.
Please also see: https://www.gov.uk/browse/business/business-tax
Let’s Make Tax Less Taxing
At An Accounting Gem Ltd, we specialise in helping small business owners in Ipswich and across East Anglia feel more in control of their tax, their numbers and their future.
We don’t just crunch the numbers, we help you plan smarter, reduce surprises and keep more of what you earn.
📞 Book your free introductory call today and let’s talk tax (without the headache).
Please see another An Accounting Gem blog: https://www.aag-accountants.co.uk/is-your-business-financially-fit/
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