The end-of-tax-year to-do list for small businesses

If you run a business, get on top of your paperwork before 2020-2021 draws to a close.

Business paperwork
Are you ready for 5 April?
(Image credit: © Getty Images / iStockphotos)

End-of-financial year planning for small businesses can be difficult – not least because the date of the end of their year may vary. But with 5 April, the last day of the 2020-2021 tax year, almost here, business owners need to be on top of their affairs.

The 5 April date has particular significance for personal taxation. For many small business owners, the key consideration is often dividend payments; each tax year, you can take £2,000 worth of dividends from your business with no tax liability, but unused portions of this allowance cannot be carried over to the next tax year. So, if you can use the allowance, it makes sense to do so. Above £2,000, basic-rate taxpayers pay 7.5% tax on their dividends, higher-rate taxpayers 32.5% and additional-rate taxpayers 38.1%.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.