Tax planning is not about clever accounting tricks. For most small businesses, it is typically about looking ahead early enough to make sensible decisions before the deadline has already passed.
That might mean setting money aside for a Self Assessment payment, checking whether a limited company purchase should happen before or after year end, reviewing pension contributions, salary, and dividends, or spotting that VAT registration is closer than expected. None of those decisions needs to be dramatic, but they are much easier when you have time to think.
Here is a practical checklist for Salisbury and Wiltshire business owners who want fewer surprises and better conversations with their accountant.
1. Know Your Likely Profit Before the Year Ends
You cannot plan around a number you have not looked at.
Start with a simple year-to-date profit review. What has come in, what has gone out, and what is likely to happen before the end of your accounting period? If you are a sole trader, this helps you estimate income tax and National Insurance. If you run a limited company, it helps you estimate Corporation Tax and decide whether any year-end action is sensible.
For companies, Corporation Tax is currently 19% for profits up to £50,000 and 25% for profits over £250,000, with marginal relief between those levels. That does not mean every business needs complex planning, but it does mean that the level of profit matters.
The goal is not a perfect forecast, just a good enough view to avoid being surprised.
2. Check What Tax Money Is Already Set Aside
The healthiest businesses treat tax as a cost they are already carrying, not a bill that arrives from nowhere.
If you are a sole trader, check whether you are setting aside enough for income tax, National Insurance and payments on account. Payments on account are usually due on 31 January and 31 July, and each one is based on half of the previous year’s Self Assessment tax bill.
If you run a limited company, check the Corporation Tax provision and any dividend tax you may personally owe. If you are VAT registered, make sure VAT money is separated from working cash.
This is part tax planning and part cash flow discipline. Our guide to cash flow habits for small businesses covers the same principle from the cash side.
3. Review Capital Spending Before You Commit
If you are planning to buy equipment, a van, machinery, computers or other business assets, then timing matters.
Many businesses can claim Annual Investment Allowance on qualifying plant and machinery, up to the current £1 million limit. In plain English, that can mean deducting the full cost from taxable profits in the year the asset qualifies.
That does not mean you should buy equipment just to reduce tax. Spending £10,000 to save a smaller amount of tax is still spending £10,000. But if the purchase is needed anyway, it is worth checking whether buying before or after year end gives the better result.
The same applies to finance. Buying outright, leasing, hire purchase and loans can have different tax and cash flow effects. Get advice before signing if the number is material.
4. Look at Salary, Dividends and Director Drawings
For limited company owners, the way you take money out of the business matters.
Salary, dividends, pension contributions, reimbursed expenses and director loan account movements all have different tax treatment. A good mix depends on profit, cash flow, other income, personal circumstances and what the company can afford.
The mistake is leaving this until after the year ends and hoping it can all be tidied up later. Some things can be adjusted, others cannot. If you want the cleanest result, review director pay and dividends before the year end, not just when the accounts are being prepared months later.
Also check that dividends have been properly documented. Board minutes and dividend vouchers may feel like admin, but they help show that dividends were handled correctly.
5. Do Not Forget Pension Contributions
Pension contributions can be useful tax planning, but they need individual advice because the rules depend on personal income, contribution history and annual allowances.
For business owners, pensions are worth discussing because they can support long-term planning as well as tax efficiency. A limited company may be able to make employer pension contributions, and sole traders may get tax relief on personal contributions.
The key point is timing. If pension contributions are part of the plan, do not leave the conversation until the deadline week. Check affordability, allowances and paperwork in good time.
6. Check VAT Before It Becomes Urgent
The VAT registration threshold is currently £90,000 of taxable turnover in a rolling 12-month period and looking ahead for the next 30 days. Growing businesses should monitor this monthly.
If you are already VAT registered, tax planning means checking more than the return total. Are you on the right VAT scheme? Are you reclaiming VAT correctly? Are you keeping proper VAT invoices? Is VAT cash being set aside as money comes in?
If VAT feels messy, our post on common VAT mistakes for Salisbury businesses is a useful next read.
7. Clean Up Bookkeeping Before the Accountant Needs It
Year-end accounts are much easier when the bookkeeping is clean.
Before the end of the period, review:
- Unpaid customer invoices
- Supplier bills that have not been entered
- Uncategorised bank transactions
- Personal spending through the business account
- Business purchases paid personally
- Old balances that no one has looked at for months
This is not just tidiness. Clean records make tax planning more accurate. They also reduce the time spent answering questions later, when everyone has forgotten what the transaction was.
8. Think About Timing, Not Just Tax
Some decisions are about when income and costs fall.
If a large invoice is about to be raised, or a major cost is about to land, it may affect profit, VAT, cash flow and tax payments. Sometimes the right answer is to bring something forward. Sometimes it is to wait. Sometimes the tax answer and the commercial answer are different, and the commercial answer should win.
Good planning is not about making the tax bill as small as possible at any cost. It is about understanding the trade-offs before you act.
9. Book the Conversation Early
The best tax planning conversations happen before year end, not after it.
If your accountant only sees the records once the year has finished, their job is mostly to report what already happened. If they see the numbers earlier, they can help you shape the decisions still in front of you.
That is where proactive accountancy earns its keep. It gives you time to ask better questions:
- Should I buy this equipment now or wait?
- Am I taking money from the company in the right way?
- Will my January or July tax payment be higher than expected?
- Is VAT registration coming?
- Do I need bookkeeping support before this becomes painful?
Getting Tax Planning Help in Salisbury
If you are a Salisbury or Wiltshire business owner and you are not sure what your tax position looks like, now is a good time to get clarity. You do not need to wait until January, March or the week before your accounts are due.
Caboodle Business Support works with sole traders, limited companies and small business owners across Salisbury and Wiltshire on tax, bookkeeping, VAT, payroll and accounts. Our enthusiastic team combines practical accountancy with a coaching-led approach, so the conversation is not just “what do you owe?” but “what business are you trying to build, and what decisions would support that?”
If you want a clearer view before the next deadline, see how we work with clients or get in touch for a no-pressure conversation.