We’re now five weeks from the end of the 2025/26 tax year. If you haven’t reviewed your tax position yet, March is the time to do it. The annual allowances and reliefs you don’t use by April 5th simply disappear – they don’t carry forward.
Why this matters now
The UK tax system resets every year on April 6th. Personal allowances, annual exemptions, ISA limits – they all start fresh. That’s good if you’re planning ahead, but it means anything you haven’t used is gone. A month might sound like plenty of time, but some of these decisions need documentation or transaction processing time.
Capital allowances and asset purchases
The Annual Investment Allowance sits at £1 million, giving you 100% first-year relief on plant and machinery. If you’ve been putting off buying equipment, computers, or business vehicles, buying before April 5th gets you the full deduction against this year’s profits.
The “full expensing” regime goes further – 100% first-year relief on main rate plant and machinery with no upper limit. For capital-intensive businesses, this is about as generous as UK tax policy gets.
Director’s pay and dividends
If you run an owner-managed business, you know the salary versus dividends calculation. March is when you need to look at your actual numbers for the year.
Should you take additional salary or a bonus before year-end? That depends where you sit relative to the higher rate threshold. For dividends, timing matters – taking them before April 6th could affect your total tax bill, depending on your other income.
The point is to review your total remuneration package now, not in May when it’s too late to adjust.
Pension contributions
Pensions remain one of the most tax-efficient options available. Both employer and employee contributions get tax relief, and employer contributions avoid National Insurance as well.
This gets particularly interesting if you’re approaching £100,000 (where personal allowance starts tapering) or £125,140 (where it disappears completely). The effective tax rate in that taper zone is brutal – pension contributions are one of the few ways to sidestep it.
You can contribute up to £60,000 annually (or 100% of earnings if lower). If you haven’t maxed out in recent years, you might be able to carry forward unused allowance from the previous three tax years.
Annual allowances that reset
These don’t carry forward, so use them or lose them:
The Capital Gains Tax annual exemption is £3,000 for 2025/26. That’s down sharply from previous years, but it’s still worth using if you’re planning to dispose of assets. Married couples get £3,000 each, so potentially £6,000 of gains can be sheltered.
ISA allowances: £20,000 per person. Contribute before April 5th or that allowance is gone. All future growth inside an ISA is tax-free, which compounds nicely over time.
Trading losses: If your business made a loss this year, make sure you understand your relief options. You can carry back against previous profits, carry forward, or claim sideways relief against other income. The mechanics differ depending on your situation.
VAT and payment planning
Making Tax Digital is now mandatory for most VAT-registered businesses. If your records aren’t digital and up to date, late filing penalties add up fast. HMRC has gotten stricter about this.
For Corporation Tax, companies need to plan their payment on account obligations well in advance. If your profits exceed £1.5 million, you’re on quarterly instalments – which means you need to know your estimated liability months ahead for cash flow purposes.
R&D tax credits and other reliefs
If your business does research and development, make sure you’ve identified qualifying expenditure before your accounts are prepared. R&D relief is complicated (SME scheme versus RDEC scheme), but it can be substantial.
Other reliefs worth checking:
- Patent Box for companies commercialising patents
- Creative industry reliefs (film, TV, video games, theatre)
- Land remediation relief for contaminated site cleanup
- EIS or SEIS for investors in qualifying companies
What to do this month
Start with your profit and tax projection for 2025/26. Get actual numbers, not guesses.
Check which allowances you haven’t used. CGT exemption? ISA limit? Pension allowance?
Think about timing. Would it help to accelerate or defer certain income or expenses?
Make sure you have documentation for everything. Claims need evidence.
For anything complex or material, talk to your accountant. Don’t try to navigate this alone if the numbers are significant.
Looking ahead to 2026/27
Tax rules change. Sometimes a lot, sometimes a little, but they change every Budget. The new tax year brings fresh allowances and possibly new rules. Staying informed about what’s coming helps you plan, rather than just react.
Final thoughts
Don’t leave tax planning until the last week of March. I’ve seen too many rushed decisions or missed opportunities because someone ran out of time.
The next few weeks are when you can still act. Review your position now. Make pension contributions. Time asset disposals. Claim available reliefs. These things take time to process properly.
April 5th will arrive whether you’re ready or not.
This article provides general guidance on UK tax planning and should not be considered specific tax advice. Tax rules are complex and change regularly. Consult a qualified tax adviser or accountant about your individual circumstances.