Starting the New Financial Year on the Right Foot

Start the new financial year as you mean to go on

The start of a new financial year is the perfect time to take stock of your business’s financial health, plan for the future, and set yourself up for success. By taking a proactive approach, you can make the most of opportunities, mitigate risks, and keep your business on a solid footing.

Below, we’ve outlined some essential steps to help you start the financial year strong.

Reflect and Review Your Financial Performance

Before you look ahead, take time to assess your business’s performance over the past year. Reviewing key financial reports like profit and loss statements, cash flow reports, and tax returns can give you valuable insights into what worked, what didn’t, and where improvements can be made.

Key areas to focus on include:

Revenue Trends and Profitability: Are you meeting your targets? If not, why?
Major Expenses: Identify cost-saving opportunities without compromising quality.
Cash Flow Patterns: Are you experiencing cash flow gaps that need addressing?
Debt Management: Assess if debt is manageable or if restructuring is needed.

Set SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) to guide your business through the year ahead.

Understand 2025/26 Tax Allowances and Reliefs

Tax planning is essential to make sure you’re not paying more than necessary. Explore available reliefs like:

R&D Tax Relief: If you’re investing in innovation, ensure you’re claiming any R&D tax relief you’re entitled to — but be aware that HMRC has increased scrutiny, so consider advanced assurance if your product is truly groundbreaking.
Annual Investment Allowance (AIA): Maximise tax relief on capital expenditure.
Employment Allowance: Reduce National Insurance costs for eligible businesses.

Stay informed about Corporation Tax rates and any changes that could impact your business. If you’re considering raising external funding, investigate tax-approved schemes like SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme).

Embrace Digital Tools

With Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) coming into force in April 2026, now is the time to ensure your financial processes are ready. Digital tools like Auto Entry, Dext Prepare, Xero, or Sage can simplify record-keeping, streamline tax submissions, and help you stay compliant.

Stay on Top of Cash Flow

Cash flow will make or break your business. Create a simple cash flow forecast to predict incomings and outgoings, allowing you to prepare for expenses and reinvest in growth. Understanding your cash position helps you plan for tax payments and avoid penalties.

Know Your Dates

Missing deadlines for tax returns, VAT submissions, and payroll can lead to costly penalties. Keep track of these dates:

Self-assessment deadline: 31 January
Company accounts filing: 9 months after your accounting year-end
Corporation tax payment: 9 months and 1 day after your accounting period ends

Review Your Balance Sheet and Chart of Accounts

Assessing your balance sheet and chart of accounts is key to understanding your business’s financial health. Start by reviewing debtor and creditor days to monitor payment patterns and cash flow. Also, check stock levels to avoid holding onto slow-moving or obsolete items that tie up cash.

Your chart of accounts should accurately reflect your business, separating different sales or project types. Make sure direct and indirect costs are clearly identified, as this helps you understand your gross profit margins. Keep an eye on EBITDA — a critical indicator often used for business valuation.

Review cash balances and consider whether existing loans remain cost-effective. Cash flow issues are a leading cause of business failure, so consider alternative funding options like stock funding or invoice discounting if needed.

A positive balance sheet boosts your position with lenders and suppliers, while a negative one could limit funding opportunities. Address any issues promptly to maintain financial stability.

Stay Compliant with Changing Regulations

With tax rules and business legislation constantly evolving, it’s essential to stay informed and prepared.

Be aware of the Economic Crime and Corporate Transparency Act 2023, which grants Companies House increased powers to tighten company registration and crack down on financial crime. From Autumn, all company directors and persons of significant control (PSCs) will need to undergo ID verification — likely a biometric check. Although full details are yet to be confirmed, it’s a good idea to review your personal information held on Companies House to ensure it’s accurate.
Additionally, keep track of changes to National Insurance rates and minimum wage levels to maintain compliance and avoid penalties.
Staying ahead of these changes will help you avoid disruptions and maintain your business’s integrity. If you need support navigating these regulations, we’re here to help.

Need help reviewing and planning for the year ahead?

Starting the new financial year with a clear plan can help you navigate challenges and seize opportunities. If you need help reviewing your financial performance, planning for tax efficiencies, or staying compliant, we’re here to support you.