As we approach the end of the financial year, now is the time to look at your personal tax liability and consider ways that you can, legitimately, bring this down. The timing of your financial decisions can make a significant difference to your bottom line.
Here are four key strategies to consider before the clock runs out on the current tax year, in April.
Do you strictly need to take your dividend in March? Most small business owners take their dividend monthly. If you are a higher-rate taxpayer, consider waiting until after April 6. By pushing the payment into the new financial year, you defer the tax due by an entire year. In accounting, timing isn’t just everything – it’s money in the bank.
2. Strategise your pension top ups
Pensions are one of the most effective tools for tax efficiency, especially if you fall into specific income brackets:
Example: If you contribute £5,000 to your pension, the Government adds a £1,250 top-up. This means £6,250 of your income is effectively taxed at the basic rate instead of the higher rate.
As always, while we provide expert tax advice around pensions, you should consult a financial adviser when making pensions decisions.
Remember, personal pension contributions can also help to avoid paying some Child Benefit back if your income is between £60,000 and £80,000.
3. Gift aid contributions
If you are planning to donate to charity, doing so before the financial year ends allows you to claim additional tax relief sooner. By making the donation this year rather than next, you accelerate the tax benefits, improving your immediate cash flow.
4. Landlords: prioritise property repairs
For those with rental portfolios, timing is key. If your property requires essential repairs, aim to complete and pay for them before the new financial year begins. This allows you to offset these costs against your current year’s rental income, bringing the tax break forward.
Our message is this: by planning in this way, you may not save tax in the absolute sense, but you benefit from the relevant tax breaks much more quickly. Keeping that money in your pocket for longer is a win.
Are you in self-assessment? Are you ready for Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA)? From April 2026, sole traders and landlords with a combined annual turnover of £50,000+ will be drawn into the system.
Our tax experts at Optimum can help guide your through. Get in touch to chat to the team, or you can find out more on this recent episode of Optimum Live.
