Self-assessment tax – the ultimate month-by-month guide to making tax stress-free

Let’s be honest – tax returns aren’t anyone’s favourite task. As a limited company director, you’re juggling your company accounts AND your personal tax return. But here’s the good news: with a bit of planning, you can turn this annual challenge into a manageable process that won’t keep you awake at night.

📝 Why Start with January? While the tax year begins in April, we’re starting our guide with January – when most directors are focused on their self-assessment deadline. After tackling your immediate tax return needs, we’ll guide you through setting up for a stress-free next tax year.

Important changes for 2025 and beyond

A few of HMRC’s changes have been delayed over the previous few years, so it’s worth knowing what has already happened recently and what’s coming up in the next year or so.

Making Tax Digital (MTD) is coming

HMRC is moving towards digital tax reporting for income tax self-assessment  (aka Making Tax Digital) from April 2026. While this might seem far away, it’s worth preparing now. If your personal income from self-employment or property is over £50,000, you’ll need to:

• Keep digital records
• Use MTD-compatible software
• Submit quarterly updates to HMRC
• Complete an end-of-year finalisation process

NB. From April 2027, the threshold will drop to £30,000.

Basis Period Reform

The way tax is calculated has changed. From April 2024, all businesses must report profits or losses on a tax year basis (6 April to 5 April), rather than based on their accounting year. If your company’s year-end isn’t 31 March or 5 April, you should already be making this transition. If you aren’t sure about this, ask your accountant, learn more from our recent blog on Basis Period Reform or give us a call for a quick chat about how it affects you.

Dividend Allowance Changes

The dividend allowance reduced to £500 in 2024/25 which means more of your dividends may be taxable, making tax planning even more important.

Understanding your director’s income

As a company director, you have flexibility in how you take your income. Let’s break down how different types of income are taxed:

Salary

• First £12,570 falls within your Personal Allowance (2024/25)
• Basic rate (20%): £12,570 to £50,270
• Higher rate (40%): £50,270 to £125,140
• Additional rate (45%): Above £125,140
• National Insurance contributions apply

Dividends

• First £500 tax-free (Dividend Allowance 2024/25)
• Basic rate: 8.75%
• Higher rate: 33.75%
• Additional rate: 39.35%

Most directors opt for a salary up to the National Insurance threshold (£12,570) with the rest as dividends to maximise tax efficiency.

Common mistakes to avoid

Before we get into our month-by-month  guide, here are some pitfalls to watch out for:
1. Forgetting about other income sources – make sure you include the following on your tax return:

• Bank interest
• Rental income
• Other business ventures
• Investment income
• Cryptocurrency gains

2. Missing the Benefits in Kind (BIK) company benefits like health insurance or company cars need reporting on your tax return. Ask your accountant to check that you are compliant in this area.
3. Dividend timing confusion – It’s when the dividend is declared and paid that matters not when the profit was earned.
4. Poor record-keeping. HMRC requires you to keep records for six years – and they need to be accurate and complete.
5. Mixing personal and business expenses – make sure you keep clear boundaries between company and personal costs.

Your month-by-month guide to Self-Assessment success

JANUARY: Deadline Month

📋 **Must-Do Tasks**
– Submit your tax return before 31st
– Pay your tax bill
– Gather any last-minute documents
– Double-check all calculations

💡 **Immediate Actions**
– Check for missing information
– Verify all income sources included
– Review allowances used
– Calculate final tax liability

🔍 **Key Deadlines**
– 31st January: Online submission deadline
– 31st January: Tax payment due
– Set reminder for July payment on account

⚠️ **Don’t Forget**
– Keep submission confirmation
– Save payment receipts
– File copy of completed return
– Note down lessons and issues to avoid for next year

FEBRUARY/MARCH: Setting Up For Success

📋 **Must-Do Tasks**
– Review last year’s process
– Set up new filing system
– Plan dividend strategy for new tax year
– Book accountant meeting if needed

💡 **Planning Focus**
– Consider impacts of new allowances
– Review salary levels
– Plan pension contributions
– Prepare for MTD changes

🔍 **System Updates**
– Choose MTD software (if relevant)
– Set up digital filing system
– Create new year folders
– Update record-keeping methods

⚠️ **Don’t Forget**
– Note upcoming tax changes
– Plan for reduced allowances
– Review business structure
– Update personal tax calendar

APRIL/MAY: New Tax Year Launch

📋 **Must-Do Tasks**
– Start new financial records
– Set up digital systems
– Review tax year changes
– Create new expense logs

💡 **Strategy Focus**
– Implement planned salary changes
– Start dividend schedule
– Review tax-efficient benefits
– Set profit targets

🔍 **MTD Preparation**
– Test chosen software
– Set up digital records
– Link bank accounts
– Practice quarterly reporting

⚠️ **Don’t Forget**
– Keep P60 from previous year
– Start mileage log
– Note new tax rates
– Save first dividend vouchers

JUNE/JULY: Mid-Year Setup

📋 **Must-Do Tasks**
– Complete P11D submissions (by 6th July)
– Review Q1 performance
– Check tax payments on account
– Update business records

💡 **Strategy Focus**
– Review dividend payments to date
– Check profit levels vs forecasts
– Plan autumn dividends
– Review pension contributions

🔍 **Record-Keeping**
– Review Q1 digital records
– Check all vouchers stored
– Update expenses log
– File bank statements

⚠️ **Don’t Forget**
– Benefits in kind declarations
– Personal income records
– Investment income details
– Mileage log updates

AUGUST/SEPTEMBER: Getting Ahead

📋 **Must-Do Tasks**
– Six-month financial review
– Check all income recorded
– Update digital records
– Review tax planning

💡 **Planning Focus**
– Project full-year income
– Review tax allowances used
– Plan remaining dividends
– Consider additional pension contributions

🔍 **MTD Readiness**
– Check digital systems working
– Practice quarterly summaries
– Review categorization
– Update record-keeping if needed

⚠️ **Don’t Forget**
– Bank interest earned
– Investment income
– Property income
– Other earnings

OCTOBER: Preparation Time

📋 **Must-Do Tasks**
– Start gathering tax return info
– Review benefits records
– Check dividend vouchers
– Update digital records

💡 **Tax Planning**
– Calculate likely tax bill
– Plan final dividends
– Review pension options
– Consider charitable giving

🔍 **Key Deadlines**
– 31st October: Paper return deadline
– Start planning January payment
– Review payment on account status

⚠️ **Don’t Forget**
– Other employment income
– Investment updates
– Personal expenses
– Complete mileage logs

NOVEMBER/DECEMBER: Final Steps

📋 **Must-Do Tasks**
– Final document gathering
– Last dividend decisions
– Complete records update
– Start return preparation

💡 **Year-End Planning**
– Last-minute tax planning
– Review pension contributions
– Plan charitable donations
– Consider capital gains

🔍 **Documentation Check**
– All dividend vouchers
– Complete bank statements
– Benefits documentation
– Expense receipts

⚠️ **Don’t Forget**
– Interest statements
– Investment proof
– Property income
– Final mileage figures

Staying compliant: your record-keeping checklist

Remember to keep these records for six years:

• All dividend vouchers
• Board meeting minutes approving dividends
• Bank statements showing interest
• Expense receipts
• Benefits in kind documentation
• P60 and P11D forms
• Pension contribution certificates

Ready to make 2025/26 tax season stress-free?

Remember, you don’t have to handle this alone – it can be daunting, especially if you are newly in business. At Adams Accountancy, we work with limited company directors and sole traders across Kent and the UK, helping them stay on top of their company and personal tax obligations. We’ll help you:

• Prepare for MTD implementation
• Optimise your salary and dividend mix
• Set up efficient record-keeping systems
• Be as tax -efficient as possible
• Meet company and personal tax deadlines

Want to chat about making next year’s tax return even easier? Drop us an email to info@adams-accountancy.co.uk or complete our contact form for a free, no-obligation chat about your situation. We promise to make it painless – and maybe even a bit enjoyable 😉

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