The year end done properly, with CIS suffered reconciled to your payment and deduction statements and carried as the tax asset it is — which for a lot of trade businesses changes what they thought they earned.
The year-end job for a trade business is mostly ordinary: the accounts, the tax return, the numbers agreed before they are filed. What is not ordinary is CIS, and it is where we spend the time.
CIS suffered is a tax asset, not a cost. It gets reconciled to your payment and deduction statements — not estimated from bank receipts, because the statements are the evidence of what was deducted and on what basis. If your accounts have been showing CIS as a deduction from income rather than as an asset on the balance sheet, that is the first thing we fix, and it usually changes what you thought your business earned.
| Item | 2026/27 |
|---|---|
| Personal allowance | £12,570, tapered £1 for every £2 of income over £100,000 |
| Basic rate | 20% on the first £37,700 of taxable income |
| Higher rate | 40% from £37,701 to £125,140 |
| Additional rate | 45% above £125,140 |
| Class 4 NIC | 6% between £12,570 and £50,270, then 2% |
| Class 2 NIC | Not a mandatory charge. Treated as paid at or above the £7,105 Small Profits Threshold; voluntary below it at £3.65 a week |
The personal allowance and the basic rate limit are frozen to 5 April 2031 — the freeze was extended by three years at Budget 2025. The National Insurance Upper Earnings Limit and Upper Profits Limit stay aligned at £50,270, and the Class 4 Lower Profits Limit stays aligned to the personal allowance, all to 2030/31. In practical terms that means every pay rise and every good year moves more of your income into a higher band than it used to.
| Item | Financial year beginning 1 April 2026 |
|---|---|
| Small profits rate | 19% on augmented profits up to £50,000 |
| Main rate | 25% above £250,000 |
| Marginal relief | Between £50,000 and £250,000 |
| Associated companies | Both limits divided by the number of associated companies plus one |
And taking the money out got more expensive on 6 April 2026. The dividend ordinary rate rose two points to 10.75% and the upper rate two points to 35.75%. The additional rate is unchanged at 39.35% and the dividend allowance remains £500. For a director-shareholder drawing a modest salary and the rest in dividends, that is a real increase in the cost of extraction and it is worth modelling rather than assuming.
For England, Wales and Northern Ireland: a personal allowance of £12,570, tapered away from £100,000; 20% on the first £37,700 of taxable income; 40% to £125,140; and 45% above that. The personal allowance and the basic rate limit are frozen to 5 April 2031, the freeze having been extended by three years at Budget 2025. Class 4 National Insurance is 6% between £12,570 and £50,270 and 2% above. Scottish non-savings rates differ and we would not quote them without checking your position.
No, not as a mandatory charge. Where your profits are at or above the Small Profits Threshold of £7,105, Class 2 contributions are treated as having been paid — your National Insurance record is protected automatically with nothing to pay. Below £7,105 you can pay voluntarily at £3.65 a week to protect the record, which is usually worth doing if you are near a qualifying year. Class 4 is separate and still charged at 6% on profits between £12,570 and £50,270, then 2% above that.
For the financial year beginning 1 April 2026 it is unchanged from the year before: a small profits rate of 19% up to £50,000, a main rate of 25% above £250,000, and marginal relief between the two. The trap is associated companies — the limits are divided by the number of associated companies plus one, so three associated companies means dividing by four and a lower limit of £12,500 rather than £50,000. The limits are also reduced proportionately for accounting periods shorter than twelve months.
If you are a sole trader or a partnership without corporate partners, yes — gov.uk describes it as the standard way to record income and expenses. It cannot be used by a limited company, an LLP, or a partnership with one or more corporate partners. Under the cash basis, cars are the exception on which capital allowances are still claimed; everything else you buy and keep for the business is simply claimed as an allowable expense, so a van and your tools are deducted rather than pooled.
Three months of returns and statements, a straight account of what is wrong and what it is costing, and a number on the gross payment status question.