Plan Ahead for the 2026/27 Tax Year

The new tax year has started, making this the ideal time for individuals, sole traders, landlords and limited company directors to review their tax position for 2026/27.

Leaving tax planning until the end of the year can lead to missed opportunities, unexpected liabilities and unnecessary pressure on cashflow. By planning early, you can make better decisions, use available allowances effectively and prepare for upcoming reporting requirements such as Making Tax Digital.

Use Your Tax Allowances Early

Many tax allowances reset each tax year, so it is worth reviewing how they apply to your personal and business finances.

This may include your Personal Allowance, dividend allowance, ISA allowance and other available reliefs. For the 2026/27 tax year, the Personal Allowance remains £12,570, the dividend allowance remains £500, and the annual ISA subscription limit is £20,000.

Using allowances effectively can help reduce your overall tax exposure and ensure you do not miss valuable tax-saving opportunities.

Review Salary and Dividend Planning for Directors

If you are a limited company director, the start of the tax year is a good time to review how you extract money from the company.

A common area to consider is the balance between salary and dividends. The most tax-efficient approach will depend on several factors, including company profits, National Insurance, dividend tax rates, pension contributions, available allowances and your wider personal income.

Planning this early allows directors to structure withdrawals more carefully rather than making rushed decisions close to the tax year end.

Forecast Corporation Tax Early

Limited companies should also review expected profits and Corporation Tax exposure as early as possible.

For 2026, companies with profits under £50,000 may fall within the small profits rate of 19%, while companies with profits over £250,000 are generally subject to the main rate of 25%. Marginal relief may apply between these limits.

Accurate profit forecasting can help you prepare for tax payments, review pricing, manage dividends and avoid surprises when accounts are finalised.

Check Whether Your Business Structure Is Still Right

If you are a sole trader, landlord, partnership or limited company owner, your current structure may not always remain the most tax-efficient option.

As your income, expenses, risk level and long-term plans change, it may be worth reviewing whether operating as a sole trader or through a limited company is still appropriate. This review should consider tax efficiency, administrative responsibilities, legal protection, pension planning and future growth.

A structure that worked well previously may no longer be the best fit for the 2026/27 tax year.

Plan Your Cashflow for Tax Payments

Tax liabilities can create pressure when they are not planned for in advance.

Whether you pay Income Tax, Corporation Tax, VAT, PAYE or payments on account, setting money aside throughout the year can make tax deadlines easier to manage. Early cashflow planning also helps business owners understand how much they can safely withdraw, reinvest or retain in the business.

Good tax planning is not only about reducing tax; it is also about avoiding unnecessary financial stress.

Prepare for Making Tax Digital

Making Tax Digital for Income Tax is now a key consideration for many sole traders and landlords.

From 6 April 2026, sole traders and landlords with total qualifying income from self-employment and property over £50,000 are required to keep digital records and submit quarterly updates to HMRC using compatible software. The threshold is due to reduce to over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028.

This means affected taxpayers should not wait until deadlines approach. Choosing suitable software, organising bookkeeping records and understanding quarterly reporting requirements early can make the transition much smoother.

Start Planning Now

The earlier you review your tax position, the more options you usually have available. Early planning can help you:

• make better use of allowances;
• manage salary and dividend decisions;
• prepare for Corporation Tax;
• review your business structure;
• improve cashflow; and
• get ready for Making Tax Digital.

Tax planning should be proactive, not reactive. Taking action now can help reduce your tax bill, avoid last-minute stress and give you better control over your finances for the year ahead.