Article by GoSimpleTax 

The new UK tax year began on 6 April, as it has for more than 225 years. As well as being the date when UK tax rules can change, it can also be a great time for sole traders and landlords to make simple changes that leave them better organised, more in control and better off. Even small changes can make a big difference. So, what improvements should you make?

1. Reconsider your prices/rent

Your costs are likely to have increased in many if not all areas in the past 12 months. And although you might be nervous about increasing your prices or rent, for fear of losing customers or tenants, not doing so will leave you worse off. Knowledge of your market should tell you whether you can increase your prices/rent and, if so, by how much. You also need to be mindful of how much others charge, because you must remain competitive. Customers and tenants may appreciate why you’ve put up your prices/rent. Obviously, there are rules regarding rent increases.

2. Minimise your costs

Your costs are likely to have increased in many if not all areas in the past 12 months. And although you might be nervous about increasing your prices or rent, for fear of losing customers or tenants, not doing so will leave you worse off. Knowledge of your market should tell you whether you can increase your prices/rent and, if so, by how much. You also need to be mindful of how much others charge, because you must remain competitive. Customers and tenants may appreciate why you’ve put up your prices/rent. Obviously, there are rules regarding rent increases.

3. Better organise your financial records

With Making Tax Digital for Income Tax due to be introduced, now’s the right time to start using accounting software. If you’re already using it, maybe you need superior accounting software that’s better suited to your needs. Get into the habit of updating your financial records more frequently. A “little and often” approach can make bookkeeping much less painful, while your figures will be more useful to you. Set aside time each week (month latest) to fully update your financial records. Use all of the time- and effort-saving features your accounting software offers. Record and categorise your costs and expenses as they arise (linking a credit/bank account to accounting software can make this really easy).

4. Start working with cash flow forecasts

When businesses fail, it’s usually because they’ve run out of cash and can’t pay their bills when required. The best way to try to avoid serious cash flow problems is to produce cash flow forecasts based on estimated likely future income and costs/expenses. Comparing the two enables you to identify times when you’re at risk of running out of cash, so you can do something about it now, when you still have time.

5. Put enough money away each month for tax

Suddenly being confronted with a tax bill that you can’t pay is literally the stuff of nightmares. It’s far better to put away a percentage of your monthly income (20%-25%) into a separate bank account, so that you have enough set aside to cover your tax bill. Government website GOV.UK has a free online tool that will give you an estimated Self Assessment tax bill based on the weekly or monthly income figure you enter. Accounting software can also tell you roughly how much tax you owe based on the figures you record.

6. File your Self Assessment tax return sooner

Why not get your Self Assessment tax return done and filed much earlier this year? Who needs all of the hassle and panic every January, as the online filing deadline fast approaches? You can file any time after the new tax year begins on 6 April (each year, some 300,000 people file their tax return in the first week of the new tax year, almost 10 months before the online filing deadline). Filing earlier doesn’t mean you have to pay your tax bill any sooner, but it will mean that you know how much tax you owe much sooner, so you can budget and save to pay your bill when due. You may even be lucky enough to find out much sooner that you’re due a tax refund.

7. Find our about UK tax changes for 2025/26

Several important changes to tax rules will be introduced in April 2025 and some might affect you. These include:

• A rise in employers’ National Insurance contributions (NIC) by 1.2% from 13.8% to 15%. And the threshold at which employer NICs become payable will fall from £9,100 to £5,000, which many employers certainly won’t welcome.
• Thankfully, the Employment Allowance will become more generous. Currently, it enables businesses with employer NIC bills of £100,000 or less in the previous tax year to deduct £5,000 from their employers’ NIC bill. From 6 April, the allowance will rise from £5,000 to £10,500, and the £100,000 threshold will be removed, which will enable more employers to benefit.
• Some minor inflationary changes to Scottish Income Tax thresholds will also take effect from 6 April 2026.
• Voluntary National Insurance rates will increase slightly for 2025-26. Class 2 NICs will rise to £3.50 a week, while Class 3 NICs will increase to £17.75 a week.
• National Living Wage (NLW) and National Minimum Wage (NMW) increases will take effect from 1 April 2025:
• For 21 year olds and over, NLW will rise to £12.21 per hour.
• For 18 to 20 year olds, NMW will rise to £10.00 per hour.
• For 16 to 17 year olds, NMW will rise to £7.55 per hour.
• From April 2025, the Furnished Holiday Lettings (FHL) tax regime will be no more. Income and gains from FHL properties will be subject to tax treatment in line with all other income and gains from property.

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