Urgent Tax Relief Claims to Make Before the 5 April Deadline

With less than seven weeks left before the 2025/26 tax year ends, business owners and company directors face a critical deadline. Several valuable tax reliefs and elections must be claimed or made before 5 April to avoid missing out. This post highlights the key opportunities closing soon and offers practical advice on how to act now to secure tax benefits.

Calendar highlighting April 5 deadline for tax relief claims

Key Tax Reliefs and Elections Closing Soon

As the tax year end approaches, attention naturally turns to several important areas where timely action can save money and improve tax efficiency:

• Income extraction planning

• Capital allowances claims

• Use of annual exemptions

• Pension contributions for tax relief

• Benefit planning for employers

  
  

Each of these areas requires specific steps before 5 April to ensure eligibility for relief or to avoid penalties.

Income Extraction Planning for Owner-Managed Companies

For owner-managed companies, reviewing how income is taken is essential. The mix of salary and dividends affects both tax bills and National Insurance contributions. Before 5 April, consider these actions:

• Check distributable reserves to confirm enough funds exist for planned dividends. Declaring dividends without sufficient reserves can cause legal and tax issues.

• Review directors’ loan accounts to avoid inadvertent overdrafts, which may trigger tax charges.

• Adjust salary levels to balance income tax and National Insurance costs efficiently.

  
  

For example, increasing salary slightly before year end might increase pension contribution room or qualify for certain reliefs, while dividends can be timed to use available tax-free allowances.

Capital Allowances and Annual Investment Allowance

Businesses planning capital expenditure should act quickly to claim the Annual Investment Allowance (AIA). This allowance lets companies deduct the full cost of qualifying assets from profits before tax, up to a set limit.

• The AIA limit currently stands at £1 million per year, but this can change, so confirm the exact figure for 2025/26.

• Purchases made before 5 April qualify for this year's allowance, reducing taxable profits immediately.

• Items like machinery, equipment, and some fixtures typically qualify.

  
  

For example, a company buying £500,000 worth of new machinery before the deadline can claim the full amount against profits, lowering the tax bill significantly.

Pension Contributions to Secure Tax Relief

Individuals and unincorporated businesses have until 5 April to make pension contributions that count for the 2025/26 tax year. These contributions can reduce taxable income and secure valuable tax relief.

• Contributions made after 5 April count for the next tax year, so acting before the deadline is crucial.

• Higher-rate taxpayers can benefit from additional relief through their self-assessment tax return.

• Employer contributions for company directors also need to be timed correctly to qualify.

  
  

For example, an individual earning £60,000 who contributes £10,000 to a pension before 5 April can reduce their taxable income, potentially saving thousands in tax.

Capital Gains and Annual Exempt Amount

The tax year end is the last chance to crystallise capital gains to use the annual exempt amount. Gains above this threshold face capital gains tax, so planning disposals before 5 April can save tax.

• The annual exempt amount for individuals is £6,000 for 2025/26 (subject to confirmation).

• Selling assets with gains before the deadline uses this allowance, while gains after 5 April count against the next year’s allowance.

• Consider spreading disposals over tax years to maximise relief.

  
  

For example, selling shares with a gain of £10,000 before 5 April means only £4,000 is taxable this year, rather than the full amount.

Employer Benefit Planning Before Year End

Employers should review benefit provision and bonus timing before 5 April to manage income tax and National Insurance outcomes.

• Trivial benefits (small gifts or perks) can be provided tax-free if conditions are met.

• Timing bonuses before or after 5 April affects tax treatment for employees and employers.

• Consider benefit-in-kind changes or salary sacrifice arrangements to reduce tax liabilities.

  
  

For example, providing a trivial benefit like a £50 gift voucher before 5 April can avoid tax and National Insurance charges, benefiting both employer and employee.

Reporting Changes and Making Tax Digital

From April 2026, larger sole traders and landlords will face expanded reporting obligations under Making Tax Digital (MTD). This means the 2025/26 year end may be the last under the traditional self-assessment system for many.

• Businesses should prepare for digital record-keeping and quarterly reporting.

• Taking action before 5 April 2026 can simplify the transition.

• This year’s tax planning should consider upcoming changes to avoid surprises.

  
  

Practical Steps to Take Now

To make the most of the 5 April deadline, consider these practical steps:

• Review your income extraction strategy with your accountant or tax advisor.

• Check your company’s distributable reserves and directors’ loan accounts.

• Plan capital expenditure to qualify for the Annual Investment Allowance.

• Make pension contributions before the deadline.

• Review capital gains and consider locking in gains to use exemptions.

• Assess employee benefits and bonus timing.

• Prepare for Making Tax Digital changes in 2026.