Few envelopes or emails cause quite as much dread as the one from HMRC.
For many business owners, landlords, sole traders and company directors, the thought of the next tax bill brings a sinking feeling, even when they know full well it is coming.
Part of the worry is the size of the figure. A bigger part is often the uncertainty, as many people simply don’t have a clear picture of what they owe.
The good news is that the fear tends to shrink once you understand your position and a tax bill that has been planned for is far less frightening than one that lands as a surprise.
If your tax bill seems to be creeping up, it isn’t your imagination.
The personal allowance has been frozen at £12,570 since 2021 and is set to stay there until April 2031.
As incomes rise, more of what you earn is pulled into tax and more people find themselves paying at higher rates even if their pay hasn’t risen in real terms.
Allowances that once softened the blow have also shrunk. For example, the Capital Gains Tax annual exempt amount is now just £3,000, compared with £12,300 only a few years ago, while the dividend allowance has fallen to £500.
Dividend tax rates also rose in April 2026, to 10.75 per cent for basic rate taxpayers and 35.75 per cent for higher rate taxpayers, which has hit many company directors who pay themselves mainly through dividends.
Add the speculation that builds around every Budget and it is easy to see why so many people feel on edge.
The single most effective way to ease the fear is to find out what you owe as early as possible.
Many Self Assessment taxpayers leave their return until January, which means the first time they see the final figure is just weeks before it has to be paid.
Completing your return in the autumn turns an unknown into a known and you then have time to budget for it, rather than having to find a large sum all at once.
For those already complying with the new Making Tax Digital for Income Tax requirements and using the latest accounting technology, their picture may already be that little bit clearer.
It also helps to understand payments on account, as the first bill is due on 31 January and can catch new self assessment taxpayers out.
This will include both the balance for the previous tax year, if you are an existing self assessment taxpayers, and the first instalment towards the current one, which often catches out people in their first years of self-employment or letting a property.
Setting up a separate savings account for tax and moving a percentage of your income into it every month is one of the simplest habits you can adopt. It means that when the bill arrives, the money is already waiting.
Tax planning works best when it is part of how you manage your finances throughout the year, rather than a scramble in March.
There are a number of reliefs and allowances that can legitimately reduce what you pay, provided they are used at the right time.
Pension contributions remain one of the most effective. Most people can contribute up to £60,000 a year with tax relief, subject to their earnings and unused allowances from the previous three years can often be carried forward.
For anyone whose income sits just above £100,000, where the personal allowance starts to be withdrawn, a well-timed pension contribution can make a significant difference to the final bill.
Company directors should also review how they draw income, as the balance between salary, dividends, pension contributions and benefits can have a big effect on the tax paid by both the individual and the company.
Much of the anxiety around tax comes from feeling that you are dealing with it on your own.
Each Budget brings new headlines, but the principles of good planning stay much the same. Know your position early and make full use of the reliefs available to you.
At Lamont Pridmore, our tax team works with businesses, landlords and private clients throughout the year to keep tax bills as low as the rules allow and to make sure there are no unwelcome surprises.
If the thought of your next tax bill is keeping you awake at night, get in touch. A conversation now could save you money and a great deal of worry later, so get in touch.