Tax planning: making considered decisions with your money

Tax planning is a strategic approach to managing your business’s financial affairs so that tax is thought about well before a bill arrives. In other words, you plan ahead to make sure you pay the right amount of tax, at the right time.

Working with your tax adviser, you can look at the deductions, allowances, reliefs and exemptions available to your business, and make sure your decisions take them into account.

For individuals, including sole traders, partners and company directors, the tax year ends on 5 April, so the run-up to 5 April is a natural time to take stock. Companies work to their own accounting periods, but the same principle applies: the earlier you plan, the more options you usually have.

How does tax planning affect your business?

One aim of tax planning is to make sure your business pays no more tax than the law requires. But it’s also about making sure you stay compliant with all the tax laws and regulations that apply to your business.

So what are the main advantages? Let’s look at five of the benefits of careful, strategic tax planning.

Five benefits of planning your tax across the year

By planning your tax across the year, you can get:

• A clearer view of your profits. Strategic tax planning helps your company identify the tax incentives, deductions and reliefs it may be entitled to, so your tax bill reflects your real position and there are fewer surprises.
• Better cashflow planning. Knowing roughly what you’ll owe, and when, means you can set money aside and avoid a scramble when payments fall due. Where a relief does reduce what you owe, more cash stays in the business.
• Compliance and lower risk. Being proactive with your tax planning keeps the company in step with the relevant tax laws and deadlines. It’s a sensible way to tick the compliance boxes and reduce the risk of penalties, interest and legal issues.
• Support for your strategic plans. When you know your likely tax position, you can decide with more confidence how much to put towards your business goals and long-term investment.
• Better-informed commercial decisions. Tax is one of your business costs. Understanding it well helps you make informed decisions about pricing, investment and growth.

Tax planning is not tax avoidance

Good tax planning works within both the letter and the spirit of the law. HMRC describes tax avoidance as “bending the rules of the tax system to try to gain a tax advantage that Parliament never intended”, and warns that most avoidance schemes simply do not work. If an idea sounds too good to be true, it almost certainly is.

Our approach is to use the reliefs and allowances that are there for businesses like yours, and to keep a clear record of why decisions were made. HMRC’s introduction to tax avoidance explains the warning signs to look out for.

Sources

Our main sources are HMRC and GOV.UK:

• HMRC: Introduction to tax avoidance
• Self Assessment tax returns: deadlines

How we can help with tax planning

Getting strategic with your tax planning has many advantages for your financial stability as a business. It works best with an adviser who knows your business and looks at your position regularly, not just once a year.

As your tax adviser, we’ll look ahead with you across the whole financial year, looking at your options and the reliefs and allowances you may be entitled to. If you’d like to know more about tax planning, we’ll be happy to explain.

Call us on 020 7164 0225, send us a WhatsApp message or email your tax question to hello@ibandco.co.uk.

You can also read about our Business Tax Advisory and Corporation Tax planning services.

First published 11 March 2025. Tax content checked on 9 October 2026. This article reflects the rules at the date it was first published. Where something has changed since, we’ve added an update note. Rules and rates change, so please check with us before acting.