Timing matters: tax-efficient decisions for sole traders and landlords

One date that matters: 5 April

Sole traders and landlords are taxed on the tax year, which runs from 6 April to 5 April. Since 2024/25 that is true for every sole trader, whatever date their accounts are made up to.

So the question for most timing decisions is simple: does this fall before or after 5 April?

Buying equipment before 5 April

Most equipment you buy for your business, such as a laptop, tools or machinery, can usually be deducted from your profits in full in the tax year you buy it. Cars follow different rules, and so do furniture and appliances in a let home.

If you were going to replace something anyway, buying it on 4 April rather than 6 April brings the tax saving forward by a full year.

Only buy what the business genuinely needs. A purchase made just to save tax still costs you more than it saves.

Pension contributions before 5 April

Personal pension contributions count in the tax year you pay them. Your pension provider adds basic rate tax relief to your contribution, and if you pay higher rate tax you can claim the extra relief through your Self Assessment return.

Tax relief is limited to your earnings for the year, and most people have an annual allowance of £60,000. Rental income does not count as earnings for this, so landlords with no other earned income get less relief. A contribution paid before 5 April counts in this tax year. Paid on 6 April, it counts in next year.

Payments on account: reduce them carefully

If your last Self Assessment bill was £1,000 or more, HMRC usually asks for two payments on account towards the next one, on 31 January and 31 July. Each is half of last year's bill.

If your profits have fallen, you can apply to reduce them. That helps your cash flow, but if you reduce them too far, HMRC charges interest on the shortfall. The right time to decide is when you have reliable figures for the year, not on a guess in January.

One more timing trap: in your first year with a tax bill, the January payment can include the whole bill for the first year plus the first payment on account for the next. It is often much bigger than people expect.

Making Tax Digital: use the quarterly figures

From April 2026, sole traders and landlords with qualifying income over £50,000 keep digital records and send quarterly updates to HMRC. The threshold is due to fall to £30,000 from April 2027. Check whether it applies to you.

The upside is that your figures are up to date every quarter. That means you can see the likely tax bill in time to plan, rather than finding out in January.

Landlords: tax on rental income rises from April 2027

The government has announced that tax rates on property income are due to rise by 2 percentage points from April 2027, to 22%, 42% and 47%.

So where a repair can sensibly wait a few weeks past April 2027, there may be a small benefit. Never delay anything that affects safety or your tenants, and remember that improvements, as opposed to repairs, are not deducted from rental income in the same way.

A simple checklist before 5 April

• Do you know roughly what your profit for the year will be?
• Is there equipment you need that you could buy before 5 April?
• Would a pension contribution before 5 April make sense for you?
• Are your payments on account still right for this year's profits?
• If you are a landlord, is there spending you are planning around April 2027?

None of these can be fixed after the date. That is why it helps to look at them in February or March, with your figures up to date.

Christina Ding runs Ding Accounting in Bournemouth. Nearly 30 years in finance, more than ten of them as a Financial Controller. ICB Practice Licence No. 25151. More about me

This guide is general information, based on the rules for the 2026/27 tax year as I understand them at October 2026. It is not advice for your particular situation. Tax rules change, and the right answer depends on your full circumstances, so please talk to me before acting on it.