End-of-year business finance checklist: what to do before 31 January

Every January, many business owners are caught out by a tax bill far bigger than they expected. The warning signs were usually there in November. Whether you are a sole trader, a limited company director or a landlord, a couple of hours on your finances now can save you that shock.

1. Self Assessment: why November beats January

The online deadline for 2025/26 returns is 31 January 2027 (see all deadlines on GOV.UK). Two months can feel like plenty of time. Starting now, though, gives you room to find missing paperwork, ask questions and, most importantly, know what you owe before you have to pay it. Our five tips for a stress-free tax return are a good place to start.

If you are self-employed, you will usually need to file a return if your gross trading income was over £1,000 in the tax year. Rental income and other untaxed income can also mean you need one. The October 2026 Budget confirmed that this £1,000 trading allowance will rise to £3,000 from 6 April 2027. That change does not affect your 2025/26 return.

Running a limited company? Your company has its own Corporation Tax and filing obligations. As a director, you may also need a personal Self Assessment return, depending on your income. Being a director does not automatically mean you have to file one.

The January bill that catches people out

This is one of the most common surprises we see.

Take a sole trader in their first full year of trading who makes a profit of £30,000. Their Income Tax and National Insurance for 2025/26 comes to roughly £4,500, and they have budgeted for that.

Because the bill is over £1,000, HMRC also asks for a first payment on account towards next year’s tax. That payment is half of this year’s bill. So the amount due on 31 January is nearly £6,800, not £4,500. A second payment of around £2,270 then follows on 31 July.

Knowing this in November gives you two months to set the extra money aside.

2. Making Tax Digital for Income Tax: who is affected from April 2027

Making Tax Digital for Income Tax has now started for some sole traders and landlords. Since 6 April 2026, it has been mandatory for anyone whose qualifying income was over £50,000 on their 2024/25 tax return, unless they are exempt. If that is you, you should already be keeping digital records and sending quarterly updates through compatible software.

The threshold is coming down in stages:

• From April 2027: qualifying income over £30,000, based on your 2025/26 return
• From April 2028: qualifying income over £20,000, based on your 2026/27 return

Qualifying income is your combined gross income from self-employment and property, before expenses. It is your turnover, not your profit. That difference catches many people out: someone with £35,000 of sales and only £15,000 of profit is still in from April 2027.

HMRC’s Making Tax Digital checker will tell you whether it applies to you and when. For a fuller walkthrough, read our Making Tax Digital guide.

What about limited companies? Making Tax Digital for Income Tax does not apply to a company’s income. However, VAT-registered companies need to follow Making Tax Digital for VAT unless they are exempt. If you are a director with your own self-employment or rental income, Making Tax Digital for Income Tax could apply to that income separately.

If your bookkeeping currently means a shoebox of receipts and a frantic catch-up every quarter, now is a good time to make things simpler. Our Clean Up Crew can untangle bookkeeping that has fallen behind.

3. Give your business an end-of-year health check

Tax deadlines aside, this is a useful time to look at how your business is really doing. Bookkeeping is not just there to keep HMRC happy. Up-to-date records show you what is actually happening, and that makes every decision easier.

Three areas are worth checking:

Your income and expenses. Compare the last few months. Look for costs that have crept up, services that are earning more than others, and subscriptions you no longer use.

Your outstanding invoices. Make a list of who owes you money and chase anything overdue now. A few paid invoices can make a real difference to your cash over the winter.

Your upcoming bills. Add up what is coming, including tax, VAT, payroll and subscriptions, and compare it with what is in the bank. Our post on why cash flow management matters goes into this in more detail.

You may find there is room to invest in something new, or you may spot a problem early enough to fix it.

4. Start planning for 2027

With a few weeks of the year left, think about what you want from your business next year. That might mean growing, taking on staff, putting your prices up or investing in equipment. It might simply mean feeling more in control of your money.

You do not need an elaborate business plan. A clear view of your income, expenses and cash flow is enough to show you where to focus. It is also worth checking how the Budget 2026 changes might affect your plans.

Remember that 31 December is not necessarily your financial year-end. Limited companies have their own accounting periods. If you are considering a big purchase for tax reasons, get advice for your situation first rather than rushing to spend before Christmas. If you are buying for clients or staff, our guide to claimable Christmas gifts is worth a read.

Frequently asked questions

Can I submit my Self Assessment tax return before January?

Yes, you can file your 2025/26 return now. Filing early does not mean paying early, because the tax is still not due until 31 January 2027. You will simply know the figure in good time.

What happens if I miss the 31 January deadline?

If your return is late, there is an automatic £100 penalty, even if you have no tax to pay or have already paid. After three months, daily penalties of £10 begin, up to a maximum of £900. Further penalties follow at six and twelve months, and interest is charged on tax paid late. GOV.UK’s penalty guidance has the full details.

Does Making Tax Digital apply to me from April 2027?

It will if your qualifying income from self-employment and property was over £30,000 on your 2025/26 return, unless you are exempt. HMRC’s checker will confirm it for you.

Do limited company directors need to complete Self Assessment?

Not automatically. It depends on your income and whether HMRC has sent you a notice to file. Your company also has separate Corporation Tax and Companies House filing requirements.

What is the difference between bookkeeping and accounting?

Bookkeeping is recording your day-to-day transactions, such as sales, purchases and expenses. Accounting uses those records to prepare financial statements, work out your tax and show how the business is performing. Good bookkeeping makes accounting easier and gives you a clearer view of your finances all year.

A little preparation now saves a January headache

Nobody starts a business because they are excited about tax returns. Staying on top of your finances, though, makes running one far less stressful.

Before the Christmas rush, set aside an hour or two to look at your records, check which deadlines apply and get a rough idea of what you will need to pay.

If you would rather not do it alone, Blue Leaf Accounting is here to help. We are based in Leighton Buzzard and work with sole traders, limited company directors and landlords across Bedfordshire and the UK. Whether you need one of our Self Assessment or limited company packages or help getting your bookkeeping back on track, we will make sure you head into 2027 organised.

Book a free, no-pressure chat and get ready for January with someone in your corner.