The 2024/25 tax year begins on 6 April 2024. This is often one of the busiest times for many business owners, as they deal with year-end filings, review finances and performance, and make plans for another year of trading.
To help you prepare your business in the lead-up to the new tax year and beyond, we highlight some of the key tasks you may have to deal with, as well as current tax-related information you should be aware of.
1. Close off the previous tax year
Before turning your focus to 2024/25, it’s important to close off the previous tax year properly. Settle outstanding bills if they are due before 6 April, and chase any outstanding invoices that still need to be paid. Make sure you’ve used all of your tax allowances for the year. For example, capital expenditures, private pension contributions, and any ISAs you have.
Review all of your business and accounting records to ensure they are in order. You need to keep records and proof of all sales and income, business expenses, wages and dividend payments, tax records, and personal income. You must retain these for at least 5 years (if you’re self-employed) or 6 years (if you trade through a limited company).
If you sell physical products and your accounting period aligns with the tax year, you will need to carry out a stocktake to record all of the inventory that your business currently has. You’ll also have year-end payroll reporting to complete, if you process wages through payroll.
2. Complete your annual payroll tasks
If you employ staff or pay yourself a director’s salary, you’ll have several payroll tasks to complete for the new tax year, including:
- Processing your year-end payroll and sending your final payroll report (Full Payment Submission) of the 2023/24 tax year to HMRC. This is due on or before the last payday of that year.
- Reviewing and updating employee payroll records to ensure they are accurate and complete, including tax codes. You will do this from 6 April 2024.
- Updating your payroll software to ensure that it uses the correct rates and thresholds for Income Tax, National Insurance, and student loan repayments. You will do this from 6 April (or earlier, if required by your particular software provider).
- Provide a P60 to each of your employees by 31 May 2024.
- Report all employee expenses and benefits to HMRC by 6 July 2024.
Be sure to check that all leavers and new starters have been processed correctly before sending your final Full Payment Submission or Employer Payment Summary for the previous tax year to HMRC.
The National Living Wage (NLW) and National Minimum Wage (NMW) increase on 1 April. Ensure all workers are being paid at least the minimum rate for their age from this date. Be aware that workers aged 21 and 22 are now entitled to the NLW.
If you’re planning to issue bonuses, or you need to pay employee expenses, make sure these are processed in the correct tax year and included in business costs for the appropriate accounting period.
3. Check tax rates, allowance, and reliefs for 2024/25
The first day of the new tax year is when most changes to tax rates, thresholds, reliefs, and allowances come into effect. The UK Government typically confirms these a few weeks before in the Spring Budget. The 2024 Spring Budget was announced on 6 March.
The Scottish Government, Welsh Government, and Northern Ireland Executive have also released their respective budgets. These confirm devolved taxes and other key economic measures for the year ahead.
Review all of the tax information applicable to your business (and to you personally) to confirm what you’ll be paying in 2024/25. Check which allowances and tax reliefs you’re eligible for, and create a list of deductible expenses you can claim to reduce your tax bills.
There is no change to Income Tax in England, Wales, and Northern Ireland. However, there are several changes to Scottish Income Tax rates and allowances for the new tax year. The UK government has also cut National Insurance rates for employees and the self-employed.
Furthermore, the dividend allowance has been cut to £500 for 2024/25. If you’re a company owner, the rates and allowances for the new tax year are key to working out the most tax-efficient combination of director’s salary and dividend income to pay yourself from 6 April.
4. Confirm your filing and tax payment deadlines
Most business owners have several filing and payment deadlines to meet throughout the year. Confirm all applicable deadlines for the new tax year as soon as possible. Make a note of them in your calendar, and set reminders to avoid penalties for late filing or late payments.
1 April 2024
New National Living Wage and National Minimum Wage rates are effective from this date. Increases to VAT registration and deregistration thresholds also take effect.
6 April 2024
The first day of the 2024/25 tax year. Most new tax rates, thresholds, and allowances apply from this date. Self Assessment filing for 2023/24 also opens, so you can submit your tax return for the previous year at any time from 6 April.
31 July 2024
The deadline for making a second payment on account. If you are due to make payments on account (advance payments on your tax bill) through Self Assessment, your second payment on account for your 2023/24 tax bill must reach HMRC by this date.
5 October, 2024
This is the Self Assessment registration deadline for 2023/24. If you need to declare self-employed earnings or other untaxed income (e.g. dividends) earned between 6 April 2023 and 5 April 2024, you must register for Self Assessment by 5 October 2024 (new users only).
31 October 2024
The deadline for filing a paper Self Assesment tax return for 2023/24. If you plan to submit a paper tax return rather than file online, it must reach HMRC by 31 October 2024. If you miss this deadline, you can file online instead.
31 January 2025
This is the deadline for filing an online Self Assessment tax return for 2023//24 and paying any tax that you owe for the same period. There’s no need to wait until this date. You can send your personal tax return and pay your bill at any time from 6 April 2024. If applicable, the first payment on account for your 2024/25 tax bill also falls due on this date.
Deadlines for VAT-registered businesses
If your business is VAT registered, you will need to submit a VAT Return to HMRC every 3-month accounting period. However, if you use the Annual Accounting Scheme, you only need to submit one VAT Return each year.
The deadline for filing your VAT Return is normally 1 calendar month and 7 days after the end of each accounting period. Any payment due must also reach HMRC by the same date.
Deadlines for limited companies
If you operate your business as a limited company, you’ll also have several company-specific deadlines to contend with. Keep on top of these to avoid facing penalties for late filing or late payments:
Company Tax Return
Deliver a Company Tax Return to HMRC no later than 12 months after the end of your company’s accounting period for Corporation Tax. You must include full statutory accounts with the tax return.
Corporation Tax
Pay your Corporation Tax bill within 9 months and 1 day after the end of your accounting period.
Accounts for Companies House
File annual accounts with Companies House no later than 9 months after the end of your company’s financial year (or within 21 months of incorporation, if you’re filing your first accounts).
Confirmation statement
Prepare a confirmation statement for Companies House 12 months and 14 days after either the anniversary of incorporation (if it’s your first confirmation statement), or the confirmation date of the previous statement.
5. Review business finances and performance
The new tax year is an ideal time to review the financial health of your business. Start by analysing your financial reports for the previous 12 months, to understand how your business is performing. This will help you to identify areas for improvement, make informed decisions in the new tax year, and set attainable goals for continued success.
When reviewing your finances and performance, think about the following:
- Is your business underperforming or overspending in any areas?
- Can you streamline processes and practices to improve efficiencies, increase productivity, and save money?
- Is there room to reduce labour costs without compromising on quality and efficiencies?
- Could you cut inventory costs by using different products or materials, sourcing new suppliers, or negotiating prices with current suppliers?
- Can you agree on different payment terms with suppliers, to improve your cash flow position?
- Is your product pricing strategy competitive?
- If you’re operating as a sole trader, would it be beneficial to convert to a limited company structure?
This start of the new tax year is also a good time to check that you’re on track to meet all of your tax and financial obligations. If you’re spending too much, missing payment deadlines, or experiencing cash flow problems, you should address these issues as quickly as possible. Seek expert advice from an accountant on how to improve the financial health and performance of your business throughout 2024/25.
Thanks for reading
No matter the time of year, there is always a lot to deal with when running your own business. However, the start of a new tax year is often a time of greater stress and worry.
Whether you’re just starting out, or you’ve been in business for some time, it’s always easier to navigate the challenges and capitalise on strengths with help and advice from an experienced accountant.
We hope this post has given you an idea of some of the key areas you need to consider as we approach the 2024/25 tax year.
Please comment below if you have any questions. For more business advice and limited company guidance, explore the Quality Company Formations Blog.
Excellent article! Thanks for these business preparation tips will use these to further enhance my UK tax advisers business.
Thank you for your comment, David.
Kind regards,
The QCF Team