Tax Saving Strategies
As we move through the first few months of the 2026/27 tax year, now is an ideal time to review your finances and identify opportunities to reduce your tax bill. Taking action early can help you maximise available reliefs, improve cash flow and avoid missed opportunities later in the year.
- Prepare for Making Tax Digital (MTD) Expansion
‘Making Tax Digital’ for Income Tax is becoming a major focus for HMRC. If you’re a sole trader with sales of £50,000 or more, now is the time to review your bookkeeping systems. From April 2026 it is now a legal requirement to keep your business records digitally and maintain them using compatible software.
Your accountant should already have made you aware of these changes and can help you choose the right software, ensure your records are MTD-compliant, and make sure you’re fully prepared ahead of the first quarterly submission deadline on 7 August 2026.
There is not yet a legal requirement for other businesses to maintain digital records but businesses that adopt digital accounting software early are often better positioned to claim allowable expenses accurately and gain a clearer understanding of their tax position throughout the year.
- Maximise Allowable Business Expenses
One of the most effective ways to reduce your tax liability is to ensure you are claiming all allowable business expenses.
Common deductible expenses include, ‘Marketing and Advertising’, ‘Staff Wages and Training’, ‘Professional Fees’, ‘Business Travel and Subsistence’ and ‘Software Subscriptions and IT Costs’
Expenses that are incurred wholly and exclusively for business purposes will qualify for tax relief. Maintaining accurate records, invoices and receipts remains essential, particularly as HMRC continues to increase its use of digital compliance checks and data matching.
- Claim Home Office Costs Correctly
With hybrid and remote working now commonplace, many business owners continue to work from home at least part of the time.
Sole traders and directors should ensure they are claiming appropriate relief for household costs used for business purposes, whether through simplified expenses or a proportion of actual costs where applicable.
- Review Pension Contributions
Pension contributions continue to be one of the most tax-efficient ways to build long-term wealth while reducing current tax liabilities.
The standard annual pension allowance remains £60,000 for the 2026/27 tax year, subject to tapering rules for higher earners and other restrictions in certain circumstances.
For business owners, employer pension contributions can be particularly attractive as they are generally deductible for Corporation Tax purposes and are not subject to Income Tax or National Insurance in the same way as salary.
Reviewing pension funding early in the tax year can help you spread contributions and make full use of available reliefs.
- Review Your Business Structure
As your business grows, the most suitable structure may change.
Sole traders, partnerships and limited companies are taxed differently, and there can be significant differences in tax rates, National Insurance liabilities, profit extraction strategies and succession planning opportunities.
A periodic review can help ensure your business structure continues to align with your commercial objectives and remains as tax efficient as possible.
- Consider Tax Relief on Charitable Giving
Supporting charitable causes can also provide tax benefits.
For individuals, donations made under the ‘Gift Aid’ scheme may allow higher and additional rate taxpayers to claim further tax relief through their Self Assessment tax return.
For limited companies, qualifying donations to registered charities are generally deductible when calculating taxable profits, reducing the amount of Corporation Tax payable.
Supporting worthwhile causes can therefore deliver both social impact and potential tax savings.
Effective tax planning is not about leaving everything until year-end. Reviewing your position during the early stages of the tax year can help you identify opportunities, improve cash flow and avoid unpleasant surprises.
Every business and individual has different circumstances, so professional advice should always be sought before implementing tax planning strategies.
Zoé McQuade is a trainee accounting technician at Abac, Chartered Accountants.
This article is for general information only. You are recommended to seek professional advice before taking action on the basis of the contents of this article.
