As we approach the end of another tax year it’s always good tax planning to look at ways businesses, sole traders and partnerships can help reduce their tax liability. Sole traders and partnerships tend to have a year end of 31st March or 5th April, while Companies have a different year end based on their company financial year end.
Claim all allowable expenses
Ensure you have claimed all allowable business expenses, such as:
- Supplier and purchase invoices
- Office costs (e.g. rent, light & heat, water and insurance)
- Business travel and mileage or fuel receipts
- Accountancy and legal fees
- Advertising expenses
- Staff salaries, bonuses, and training costs
Invest in equipment and machinery
If you have any equipment, plant and machinery or office equipment that needs replacing, consider purchasing before the end of the financial year. Investing in green, energy-efficient items like solar panels is also an idea.
Businesses can claim Capital allowances through the Annual Investment Allowance (AIA), allowing the cost of the purchase to be deducted from taxable profits.
New BIK Changes for Double/Twin Cab Pick-Ups
If you’re considering purchasing a double cab pick-up, it would be advisable to do this before 31 March 2025 for companies or 5th April 2025 for sole traders and partnerships, so the current tax rules apply.
Benefit in Kind (BIK) Changes (from 6th April 2025)
- Double cab pick-ups will be classed as cars rather than commercial vehicles.
- The flat BIK rate of £3,960 will be replaced with car BIK rates (2%–37%), based on CO₂ emissions.
- Electric double cab pick-ups (1-tonne+ payload) will have a 3% BIK rate, increasing by 1% annually until 2028.
Capital Allowances (CA) Changes (from 1st April 2025)
- Double cab pick-ups will be taxed as company cars for CA purposes.
- They will no longer be classified as “plant and machinery.”
- New CA rates will range from 6%, 18%, or 100%, depending on CO₂ emissions.
Transitional Period Until 2029
- Double cab pick-ups purchased, leased, or ordered before 1st April or 6th April 2025 will retain existing tax treatment until the earlier of:
- Disposal
- Lease expiry
- 5th April 2029
- To qualify, businesses must provide proof of purchase or order, such as:
- Contract
- Deposit documentation
- Written confirmation from the supplier
Make Pension Contributions
Contributions to a pension scheme not only help secure retirement savings but also offer tax relief.
- Sole traders and partnerships who are higher rate tax payers can claim tax relief on personal pension contributions on their personal tax return
- Companies can make employer contributions, which are deductible as a business expense and reduce corporation tax.
Gift Aid and Charitable Donations
Donating to registered charities through Gift Aid allows businesses and individuals to claim tax relief while supporting good causes.
If you would like to explore any of these points further, please get in touch.
