Overview of sole trader tax planning

By Tolley
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The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Overview of sole trader tax planning
  • Planning events
  • Accounting period ends
  • Pension contributions
  • Tax year end
  • Completion of accounts
  • Completion of tax return
  • Payments on account

Because sole traders are the most simple trading entity possible, it is very easy to overlook them when it comes to planning work. It is often the case that planning for such clients will be done on a purely reactive basis, such as when they approach an adviser to discuss incorporation or purchasing large capital items.

However, advisers should endeavour to review all of their clients’ positions at least once a year.

Planning events

Determining when to conduct planning for sole traders can be challenging. There are several annual events which may dictate when best to undertake planning work and what sort it is:

EventTypical planning considerations
Accounting period endCapital purchases
Expenditure deductible when paid
Pension input period (PIP) endPension contributions (annual allowance planning)
Tax year endPension contributions (higher rate relief planning)
Charitable donations
Personal taxation considerations
Completion of accountsProvisions
Bonus accruals

More on Planning for sole traders:
Changing accounting date
Sole trader planning ― payments on account
Sole trader ― accounting period end planning
Entrepreneurs’ relief for sole traders
Pension contributions for sole traders
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