Posted August 5, 2025

Mid-Year Tax Check-Up: 5 Things to Review Now to Save Money Later

August 2025

As we settle into the second half of 2025, now is the perfect time to pause and review your tax position. With the 2024-25 tax year firmly behind us and the current tax year well underway, conducting a mid-year tax check-up can help you identify opportunities to reduce your tax liability and avoid costly surprises come January.

Whether you’re a sole trader, company director, or employed individual with additional income streams, taking proactive steps now can make a significant difference to your final tax bill. Here are five key areas to review that could save you money.

1. Maximise Your Pension Contributions

One of the most tax-efficient ways to reduce your income tax liability is through pension contributions. For the 2025-26 tax year, you can contribute up to 100% of your relevant pensionable earnings or £60,000 (whichever is lower) and receive tax relief at your marginal rate (this assumes you don’t have a tapered annual allowance).

What to review:

• Have you made full use of your annual allowance so far this year?
• If you’re a higher or additional rate taxpayer, are you claiming the additional relief through your self-assessment?
• Could you benefit from carrying forward unused allowances from the previous three tax years?
• For company directors: would employer pension contributions be more tax-efficient than salary or dividends?

Action point: Calculate your current contribution level and consider increasing monthly payments or making a lump sum contribution before the tax year ends.

2. Review Your Dividend and Salary Mix

For company directors and shareholders, getting the right balance between salary and dividends remains crucial for tax efficiency, especially given the recent changes to tax rates.

The current dividend tax rates for 2025-26 are:

• Basic rate: 8.75%
• Higher rate: 33.75%
• Additional rate: 39.35%

What to review:

• Are you taking the optimal salary level (typically around the National Insurance threshold)?
• Have you utilised your £500 dividend allowance?
• With corporation tax at 25% for profits over £250,000, how does this affect your extraction strategy?
• Are there opportunities to gift shares to a spouse or civil partner to utilise their allowances?

Action point: Model different salary/dividend combinations to find the most tax-efficient approach for your circumstances.

3. Capital Gains Planning

With the annual CGT exemption at £3,000 for 2025-26, careful planning around asset disposals is more important than ever.

What to review:

• Do you have any assets showing gains that you could realise before the tax year end?
• Are there any loss-making investments you could dispose of to offset gains?
• For business owners: could you benefit from Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) on qualifying disposals?
• Have you considered the timing of property disposals, particularly with regard to the 60-day reporting requirement?

Action point: Review your investment portfolio and consider whether any rebalancing could be done tax-efficiently within your annual exemption.

4. Expense Claims and Allowable Deductions

Many taxpayers miss out on legitimate expense claims, particularly those working from home or running their own business.

What to review:

• Working from home: Are you claiming the flat rate allowance (£6 per week) or calculating actual additional household costs?
• Business expenses: Have you captured all allowable costs including travel, professional subscriptions, training, and equipment?
• Mileage claims: Are you claiming the full 45p per mile (first 10,000 miles) for business journeys?
• Clothing and uniforms: Have you claimed for specialist work clothing or uniform cleaning costs?
• Professional subscriptions and union memberships: Don’t forget to claim for any professional body subscriptions or union memberships.

Action point: Set up a system to track expenses for the remainder of the tax year and review what you might have missed so far.

5. Income Timing and Smoothing

For those with irregular income or the ability to control when income is received, timing can be crucial for tax efficiency.

What to review:

• Could you defer invoicing until after 5 April to spread income across tax years?
• Are you approaching any income thresholds that would affect your tax rate or allowances?
• Child Benefit charge: If your income is near £60,000, could timing help you avoid the charge?
• Personal allowance tapering: Those earning around £100,000 lose £1 of personal allowance for every £2 of income above this threshold.
• For pension contributions: could income timing help you avoid the tapered annual allowance?

Action point: Review your projected income for the year and consider whether any timing adjustments could reduce your overall tax liability.

Taking Action

A mid-year tax review isn’t just about identifying opportunities – it’s about implementing them while you still have time. Many tax planning strategies require action well before the tax year end to be effective.

Consider these immediate steps:

• Book a mid-year review with your accountant to discuss your specific circumstances
• Update your records to ensure all income and expenses are properly captured
• Set reminders for key dates, such as the January self-assessment deadline
• Review your business structure to ensure it remains tax-efficient as your circumstances change

Tax planning is most effective when it’s proactive rather than reactive. By taking time now to review these five key areas, you’re positioning yourself to minimise your tax liability and avoid rushed decisions as the tax year draws to a close.

Remember, tax rules can be complex and everyone’s situation is different. What works for one person may not be appropriate for another, so it’s always worth seeking professional advice tailored to your specific circumstances.

Don’t wait until next March to think about your taxes – the decisions you make now could save you significant money come next April.

For personalised advice on your tax planning opportunities, contact our team today. Our experienced chartered accountants can help you navigate the complexities of the UK tax system and ensure you’re making the most of every available opportunity.