Year-end tax planning if you’re self-employed

As the end of the tax year approaches, it’s sensible to take stock. 

For the self-employed, the weeks leading up to 5th April often provide a clearer picture of annual income, business performance and cash flow. That makes this a practical point to review whether your tax arrangements remain appropriate and whether you’ve made full use of the allowances available to you.

Whether you operate as a sole trader, run a limited company or work through an umbrella company, year-end planning is rarely about dramatic last-minute changes. More often, it’s about confirming that income, expenses, savings and profit extraction have been handled in a structured and efficient way before the tax-year deadline passes. 

Below are some areas to consider before the tax year closes.

Pensions remain one of the most effective ways to combine long-term financial planning with tax efficiency.

If you’re a sole trader, personal pension contributions attract income tax relief at your highest marginal rate. Before 5th April, it’s worth reviewing how much of your annual allowance you’ve used and whether you have unused allowance from the previous three tax years that could be carried forward. In some cases, an additional contribution before year end can also influence which income tax band you fall into.

If you run a limited company, pension contributions can form part of your wider profit strategy. Employer contributions made by your company are normally treated as a business expense, reducing corporation tax and typically avoiding income tax and National Insurance. For many directors, this provides a structured way to move company profits into long-term personal savings.

If you operate through a limited company, you need to keep in mind that your company and your personal tax position work to different calendars.

Your company pays corporation tax based on its own accounting year end, which may fall at any point in the year. You personally, however, are taxed according to the tax year ending on 5th April. This applies to salary, dividends, personal pension contributions and ISA investments.

As year-end approaches, it can be helpful to review how these two timelines interact. Decisions about dividends, retained profits and contributions may affect both corporation tax and your personal tax position. Ensuring they are aligned before 5th April reduces the risk of unintended outcomes.

If you extract profits through dividends, the end of the tax year is an appropriate time to check your overall income level. This includes confirming whether your dividend allowance has been used and whether taking additional dividends would move you into a higher tax band. In some cases, retaining profits within the company may better support your longer-term plans.

The key is not simply to reduce tax, but to ensure your income is structured in a way that remains consistent and predictable.

The 5th April cut-off also determines how income and expenses are allocated for tax purposes.

Reviewing whether allowable expenses have been fully recorded, and whether significant purchases should fall before or after the tax-year boundary, can help maintain clarity. While decisions should always be commercially driven, being aware of the reporting deadline ensures your accounts accurately reflect your position.

Your ISA allowance cannot be carried forward, so any unused capacity will be lost after 5th April. You can invest up to £20,000 in the current tax year, and any growth or withdrawals remain free of further tax.

For many self-employed individuals, ISAs complement pension savings by providing flexibility and accessible capital alongside longer-term retirement provision. Ensuring your allowance has been considered before year end can help maintain a balanced approach.

If you hold investments outside ISAs or pensions, or you are considering selling assets, reviewing your capital gains position before the tax year closes may be sensible.

Each individual has an annual capital gains tax allowance, which resets after 5th April. Planning ahead may allow you to use that exemption, offset gains against losses, or consider transfers between spouses or civil partners. If you are building a business with a future sale in mind, consistent planning over time is often more effective than leaving decisions until the point of exit.

Certain inheritance tax exemptions and gifting allowances also operate on a tax-year basis. As 5th April approaches, you may wish to review whether annual gift exemptions have been used and whether surplus income can be passed on efficiently. For business owners, it is also worth understanding how business assets fit within longer-term estate planning.

Regular use of allowances, rather than occasional large decisions, often leads to more effective outcomes.

Your position will, of course, depend on your income, business structure and long-term objectives.

As an independent financial advice partner to IPSE members, Chase de Vere provides access to advisers who understand the financial realities of freelancers, contractors and business owners.

If you would like to review your position before the end of the tax year, you can arrange an initial conversation to explore whether any action is appropriate and ensure everything is structured correctly for the year ahead.

There is no obligation – simply practical guidance tailored to your circumstances.

Important information: This article is for information only and does not constitute personal financial advice.

The value of investments can fall as well as rise and you may get back less than you invest. Past performance is not a reliable indicator of future returns.

Tax treatment depends on individual circumstances and may be subject to change in the future. The availability of tax reliefs will depend on personal and business factors and cannot be guaranteed.