SME Year-End Tax Review: Essential Steps for UK Businesses
The end of the financial year is a strategic point for SMEs to assess their tax exposure and ensure they’re operating as efficiently as possible. Proper year-end planning helps safeguard compliance, manage liabilities, and capitalise on reliefs provided under UK tax law.
Core Areas for Review
1. Capital Allowances
Evaluate capital expenditure to confirm you have fully utilised available reliefs such as the AIA and temporary full expensing (in place until 31 March 2026). Consider whether advancing planned asset purchases could enhance tax relief. If disposing of plant or machinery, assess whether delaying the sale until after year-end would better preserve your allowances.
2. Chargeable Gains Strategy
Assess any planned disposals of chargeable assets. A deferral may decrease tax exposure. Reliefs including holdover relief, rollover relief, and the Substantial Shareholdings Exemption can help defer or eliminate gains. Groups may also use elections to reallocate gains and losses for optimal tax efficiency.
3. Deductible Expenses
Review business and property-related expenses to ensure all qualifying costs are claimed. Landlords should check council tax, agent fees, and replacement of domestic items. Note that property purchase or sale legal fees are not deductible against rental income, though they may reduce future chargeable gains.
4. Cash Basis Considerations
For unincorporated businesses using cash basis, confirm that capital expenses meet the criteria for small traders. Residential landlords should ensure correct application of domestic item replacement relief.
Practical Planning Measures
Conduct a full records review to ensure transactions are correctly classified, and plan the timing of high-value purchases or disposals. Professional advice is strongly recommended to ensure full compliance and to identify tax-saving opportunities.
Conclusion
Year-end tax checks are a vital component of financial management for SMEs. By reviewing capital allowances, chargeable gains, and deductible expenses, businesses can minimise tax liabilities and position themselves more strongly for the upcoming financial period.