Tax and tips | Severn Accounting

As we head into another tax year, many of our clients ask the same questions: “What can I claim?” and “How do I stay on the right side of HMRC?” These are sensible questions, and getting the detail right can make a real difference to your bottom line. Whether you’re self-employed, running a limited company, or managing a rental property, understanding the tax landscape helps you work smarter, not just harder. We’ve pulled together some practical tips to help you navigate the 2024/25 tax year with confidence.

Know Your Deadlines

Deadlines are non-negotiable in the eyes of HMRC. For the 2024/25 tax year, Self Assessment tax returns must be filed by 31 January 2026. If you submit online and use HMRC’s software to calculate your tax, there’s less room for error, and you’ll get feedback immediately if something looks wrong.

For limited companies, your Corporation Tax return must be filed within nine months of your year-end. Miss these deadlines, and penalties start to stack up quickly—first, a £100 automatic penalty, then 5% of the tax due if you’re still late after three months. It’s worth putting a date in your calendar now, even if your year-end isn’t until later in 2025.

If you’ve registered for VAT, your VAT returns are due monthly or quarterly, depending on your scheme. Again, missing a deadline triggers penalties. The good news? Modern accounting software sends you reminders, so there’s no excuse for a slip-up.

Maximise Your Allowable Expenses

One of the most straightforward ways to reduce your tax bill is claiming everything you’re legally entitled to claim. Many self-employed people leave money on the table here.

If you work from home, you can claim a portion of your household costs—utilities, internet, council tax, mortgage interest or rent. The simplified approach allows you to claim £10 per week (£520 per year) without detailed records, though if your actual costs are higher, you can claim the precise figure if you keep evidence.

Professional fees—accountant’s fees, legal advice, insurance—are all allowable. So are business subscriptions, office supplies, and equipment under £500. Car expenses? You can claim fuel, maintenance, insurance, and depreciation, or use the HMRC simplified mileage rate of 45p per mile for the first 10,000 miles, then 25p per mile thereafter.

Training and professional development are deductible too. If you’re improving skills directly relevant to your business, HMRC usually accepts it. The key word is business-related—a general MBA might be trickier than a specialist qualification in your field.

Keep receipts and invoices. Digital records are fine, and cloud storage makes this easier than ever. A good accountant will spot deductions you’ve missed, so it’s worth having a conversation about what you’ve claimed in previous years.

Structure Matters for Limited Companies

If you run a limited company, how you extract profit—salary versus dividends—affects your tax bill. For 2024/25, the basic rate of Income Tax is 20%, and Corporation Tax is 25% (for profits over £50,000). National Insurance on salaries is also a consideration.

Many owner-directors find it tax-efficient to take a salary up to the National Insurance threshold (currently £12,570) and then pay themselves via dividends from retained profits. You’ll avoid employee National Insurance and benefit from the dividend allowance, though the maths varies depending on your profit level. This is where working with a good accountant really pays for itself.

Make sure you’re reporting dividends correctly to Companies House and submitting your Confirmation Statement on time. Filing errors can attract penalties and damage your company’s reputation with regulators.

Keep Personal and Business Finances Separate

Whether you’re self-employed or running a company, separating personal and business finances isn’t just best practice—it’s essential. A business bank account makes it far easier to identify allowable expenses, prepare accurate accounts, and defend your tax position if HMRC ever asks questions.

Many small business owners still mix personal and business spending, which creates headaches at tax time and makes it harder to claim legitimate deductions. A separate account costs very little and saves considerable time and stress.

Final Thoughts

Tax doesn’t have to be complicated, but it does require attention to detail and a willingness to stay organised. The difference between a chaotic shoebox of receipts and a well-structured set of records can easily be thousands of pounds over a few years.

For tailored advice, contact Severn Accounting — we’re here to help.