As the financial year comes to an end, and business starts to pick up, it may be tempting to look to the year ahead, but for SMEs, the weeks before year end can make a significant difference to your tax bill, cash flow and overall financial health.
A little planning now can save money, reduce stress, and set you up for a strong start next year. That’s why we’ve put together a practical, friendly guide to what small and medium-sized businesses should be doing before the end of the tax year.
- Get a Clear Picture of Your Numbers
- Make Sure You’ve Captured All Allowable Expenses
- Consider Timing of Income and Costs
- Review Capital Expenditure
- Conduct a Stocktake
- Check VAT and Payroll Compliance
- Set Aside Funds for Tax
Get A Clear Picture of Your Numbers
Before making decisions about the year ahead, you need visibility. Reviewing profit, loss and expenditures is essential to making educated decisions.
- Review your year-to-date profit and loss
- Estimate your likely taxable profit
- Compare this year to the previous year
If your profits are up, it’s likely you will face a larger tax bill. Identifying this now gives you time to plan, rather than react, and eases the financial pressure of the bill.
Make Sure You’ve Captured All Allowable Expenses
One of the most common issues faced by SMEs is under-claiming expenses. These can quickly add up, costing your business in the future.
Go through your accounts carefully and check for:
- Travel and mileage
- Software subscriptions
- Professional fees
- Home office costs (if applicable)
- Utilities and phone bills
- Training costs
- Insurance premiums
Ensure everything has been recorded properly, as even small omissions can add up over the course of a year.
Consider Timing of Income and Costs
Tax planning is often about timing. If you’re planning on making a large purchase, such as purchasing equipment, investing in marketing or upgrading systems, doing so before year end may allow you to claim tax relief sooner.
Likewise, review unpaid invoices and outstanding costs. Are there expenses that should be accrued before year end? Are there debts that are genuinely unrecoverable and should be written off?
These decisions should always be commercially sensible first; tax efficiency is a bonus, not the sole driver.
If you need any financial assistance to complete these purchases before the year end, our handy advisors are here to help. Visit our Small Business Loans page to find out more.
Review Capital Expenditure
Many tax systems offer tax relief for capital investment. If you’ve been planning to buy machinery, computers, vehicles, or specialist equipment, it’s worthwhile checking:
- What capital allowances are available
- Whether there are investment incentives in place
- Whether buying before year end is beneficial
If timed correctly, this can significantly reduce your taxable profit.
Conduct a Stocktake
If your business holds stock. It’s essential you:
- Perform a physical stocktake before year end
- Identify obsolete or slow-moving items
- Adjust values where appropriate
Accurate stock figures directly impact your reported profit, and therefore your tax liability.
Conducting a stocktake can also give you a good insight into the cashflow of your business, allowing you to see what stock is being used or sold, and what is deadstock. If you would like any help assessing your cashflow to make sure you are maximising your profits, our handy Quick Cash Flow Assessment can identify possible issues and give you simple, practical insights.
Check VAT and Payroll Compliance
Before the tax year end:
- Ensure VAT returns are up to date
- Reconcile VAT control accounts
- Confirm payroll submissions are accurate
- Check PAYE and other liabilities are fully recorded
Cleaning up errors now avoids costly corrections later, especially with new rules being introduced in April 2026 which will result in higher fines and penalty points.
Set Aside Funds for Tax
One of the biggest causes of SME stress is unexpected tax bills.
Before year end:
- Estimate corporate/income tax payable
- Forecast VAT liabilities
- Consider upcoming payroll payments
- Ring-fencing funds now prevents cash flow shock later
If you find yourself short of cash for these tax bills, don’t let the costly fines add up, our range of business loans from £5,000 to £1 million are available to help ease the pressure; and you can find out if you’re eligible in just 30 seconds with no affect on your credit score!
How Can Capify Help?
The above guidance may seem daunting, especially as year-end is quickly approaching, but it isn’t just as administrative milestone, it’s a strategic opportunity. With some forward planning, SMEs can legally reduce tax exposure, improve cash flow, strengthen financial control and enter the new tax year with clarity and confidence.
If you find yourself with an unexpected tax bill, or a large expense that needs resolving before year-end, get in touch with our friendly experts to see how we can help.
