UK CFOs: A 2025 guide to closing the tax year (& preparing for the next)

It's the end of the fiscal year in the UK, which is typically a very busy time for finance teams and accountants. The good news? A little preparation now can save a lot of hassle later.

Thanks to Maggie Stancheva, Founder at VEDA Accounting, for helping with this short guide to wrapping up the fiscal year with Payhawk, covering expense management, VAT reclaims, HMRC requirements, and employee benefits so you can keep everything running smoothly without the last-minute stress.

You know the distinction: Your company’s financial year end is when you close your books and report on performance, while the UK tax year end (5th April 2025) is when HMRC checks tax liabilities and ensures businesses and individuals have settled their obligations.

So far, so clear. But 2025 is looking a little different already, so as April 5th approaches, here’s what you need to keep in mind:

• P11D readiness: As usual, P11D forms are due in July (and prepared for the period up to April). No major P11D changes are planned for the 2025 (employers must still report benefits and expenses not processed through payroll as usual), but changes are planned for April 2026.

HMRC advises:

The mandatory payrolling of most benefits in kind (BiKs) will take effect from April 6, 2026. This means that starting from the 2026/27 tax year, employers will be required to report and collect Income Tax and Class 1A National Insurance Contributions on these benefits through payroll in real-time. Consequently, the traditional P11D and P11D(b) forms will no longer be necessary for most benefits after the 2025/26 tax year. However, for certain benefits like employment-related loans and accommodation, employers can choose to payroll them voluntarily from April 2026, with mandatory inclusion to be determined later.

• Minimum wage increases take effect from 1st April 2025, so make sure you’ve got any and all payroll adjustments ready and in place
• VAT and National Insurance updates: Check directly with HMRC for any threshold or rate changes that impact your business

How does the end of the tax year impact UK businesses?

As the tax year winds down in the UK, it's a critical time for businesses, and here's why:

1. Employee benefits:

Businesses typically offer "perks" like pension topups, bikes, and company cars. When the tax year ends, they must ensure everything's up-to-date and recorded with these employee benefits or BiK. You and your finance team colleagues must double-check that they follow the tax rules and report any perks correctly.

How Payhawk makes BiK management easier

Our spend management solution can help finance teams track and categorise these benefits effortlessly. Employees can use corporate cards to cover perks, snap receipts, and categorise expenses in real time using custom fields. This easy process ensures compliance while streamlining reporting and reducing admin work.

Your finance team can create custom expense categories such as “benefit in kind” and sync them with accounting systems for seamless tracking.

Picture the scene: Your Sales Manager, Ben, uses his company card for his regular commute into the office (essentially turning it into a BiK).

Here's how it can look with our solution: Ben uses his corporate card to pay for the train, snaps a photo of the receipt, and uploads it to the Payhawk expense management app. Then, he picks a spend category from a list set up by the finance team and adds any extra details. This data then shoots into the ERP in real time, letting Ben’s finance co-workers track his spend and check which category it falls into.

Alternatively, you can use custom fields in the Payhawk app and create them specifically for different types of 'BiK', like employee travel or welfare. These custom fields are then only visible to your finance team (so they won’t impact how your cardholders use the app). But remember you’ll need to approach BiK differently from 2026.

Maggie Stancheva, Founder of VEDA Accounting, advises:

From an accounting perspective, the upcoming changes in April 2026 around benefits in kind reporting will have a significant impact on payroll workflows. At VEDA Accounting, we're advising clients to start reviewing their systems now to ensure a smooth transition. Having real-time reporting capabilities in place will be key to staying compliant and avoiding last-minute adjustments.

2. Budget planning:

UK companies typically take a moment to reflect on how they've done financially over the past tax year.

You might use your past year’s analysis to plan out where you want the business to go next with your senior stakeholders. You might set fiscal year goals, change direction, reconsider hiring, etc. It's typically a really good time to take stock, including reworking budgets and ensuring you can keep them on track in the coming 12 months.

At Payhawk, we make ongoing budget tracking seamless, giving you real-time visibility into spend across departments, suppliers, and projects. Budget owners can see how every expense impacts their budget before approving it, while finance teams get instant alerts for potential overspending — without the need for constant back-and-forth.

Across our global customer network, finance leaders agree: Effective budget planning isn't just about setting targets; it's about having the right tools to track and adapt in real time.

Finance teams need instant insights into spending to make data-driven decisions and keep budgets on track. With clear oversight, businesses can confidently allocate resources, spot inefficiencies, and drive smarter financial strategies. And that's where a solution like ours is invaluable.

At Payhawk, we automatically track, categorise (based on your insights), and link all spend to the right budgets, making planning ahead so much easier. So, whether you’re managing marketing spend, operational costs, or multi-entity budgets, we can help you stay in control, reduce admin, and focus on business growth.

3. Minimum wage and payroll changes

The topic of minimum wage and payroll changes really needs a whole section. From 1st April, you’ll be paying any of your minimum wage employees more, but of course, your other costs likely won’t go down, so we’ve outlined some useful ways to find savings elsewhere in your business with the support of real-time spend data (alongside the other must-remember points.)

New minimum wage from 1st April 2025: How to prepare

The UK government has announced new national minimum wage and national living wage rates, effective from 1st April 2025. As an employer, you must ensure you’re fully compliant and prepared for these changes.

Here’s what you need to do:

1. Update payroll systems
Make sure your payroll software and processes reflect the new rates from 1st April 2025. You should check any automated payroll systems early to ensure they apply the correct wage based on employees’ ages and employment status.

2. Identify affected employees
Review your employee records and identify any workers who may be earning below the new minimum rates. Pay special attention to young workers and apprentices, who will see the biggest percentage increases.

3. Budget for higher wage costs
The wage increases could have a significant financial impact, especially for businesses employing a large number of minimum wage workers, so you should:

• Assess how the changes affect your payroll budget and factor them into your financial planning
• Consider whether you need to make price adjustments or other savings in order to offset increased labour costs (see later sections)

4. Review pay structures across your business
A rise in minimum wage often leads to requests for pay increases from employees currently earning just above the new threshold.

• Review salary bands to maintain fair pay differentials between different roles.
• Ensure pay structures remain competitive and sustainable.

5. Communicate with employees
Let your staff know about their pay increases before April 2025.

• Provide clear payslips showing updated wages.
• Be ready to answer questions about overtime, bonuses, pensions, and tax deductions.

6. Check for knock-on effects
The increase in minimum wage may impact:

• Overtime pay and bonuses if they’re calculated as a percentage of base pay.
• Pension contributions, as they’re linked to qualifying earnings.
• Holiday pay calculations, particularly for hourly-paid staff.

7. Update employment contracts and policies
Review employment contracts to ensure they comply with the new rates and make any necessary amendments. If your business employs apprentices, double-check their pay progression plans to ensure compliance.

Also, check where and if IR35 rules apply if engaging contractors through personal service companies (PSCs). These rules ensure that contractors working like employees pay similar tax and NIC as direct employees.

Remember to assess employment status and, if needed, support contractors with their self-assessment submissions by providing any tax-related documents they need, such as income details, expenses, and relevant statements.

8. Stay compliant and avoid penalties
HMRC regularly investigates employers who fail to pay the correct minimum wage, so make sure everything is in order.

Consider running an internal audit before 1st April 2025 to avoid any issues. Refer to HMRC guidance on minimum wage compliance or seek professional advice.

9. Consider workforce planning and efficiency
If wage increases significantly impact your costs, you may need to:

• Consider automation or process improvements to maintain profitability.
• Improve efficiency by reviewing business spend across all teams and entities (see section below).

How to pinpoint savings via real-time spend visibility to offset higher minimum wage costs

With the minimum wage rising from 1st April 2025, you must ensure your other expenses are in order.

Instead of making tough trade-offs, you can offset increased payroll costs with complete visibility over your company spend. It's much easier to cut waste, optimise budgets, and make smarter financial decisions with real-time insights into where your money is going.

Take control of your spending and find saving opportunities to help cover rising wage costs with these top five tips;

1. Spot and eliminate wasteful spending: Use real-time tracking to identify duplicate subscriptions, underused services, or unnecessary expenses that you can cut without affecting operations
2. Make every pound count: Get complete visibility over spending across teams and departments; you can redirect funds from low-priority areas to cover essential costs like wages
3. Negotiate better supplier deals: With clear data on what you're spending, you can renegotiate contracts, consolidate suppliers, and cut costs without sacrificing quality
4. Tighten approval processes: Stop unnecessary spending before it happens by setting up automated approval workflows that flag wasteful expenses in real time
5. Avoid financial blind spots: Track and categorise every transaction across the business to ensure that every penny is accounted for, reducing inefficiencies and preventing cash from slipping through the cracks

Make sure you have a spend management solution that gives you complete real-time spend visibility, so you can stay in control of your finances and offset higher wages with other costs without compromising growth or service quality.

Instead of reacting to rising expenses, take a proactive approach — find savings, optimise budgets, and protect your bottom line.

Andrew Jacobi, VP of US Finance at State of Play Hospitality, shares how his team used our solution (and direct ERP integrations) to pinpoint areas for savings:

At the end of the period, we check if we forecasted spend correctly. With Payhawk [and NetSuite], venue managers track spend against budget and GL categories and can review variance to ask: Did we overspend? Payhawk helps us spot issues fast. If DJ costs exceed expectations, for example, we check invoices, confirm categorisation, and ask, ‘What happened? We planned $5,000 but spent $7,000. Should we adjust the budget?’

Learn more in our guide, The CFO agenda: Unlocking growth without compromise.

VAT and National Insurance updates

For NI, we recommend you check directly with HMRC for any NI threshold or rate changes that impact your business. These include:

• NI rate increase: The employer's NI will rise from 13.8% to 15% on earnings above the threshold
• Lower threshold: Employers will start paying NI on salaries above £5,000 (previously £9,100)
• Higher NI allowance: The employer's NI allowance will increase from £5,000 to £10,500, helping to offset costs for small businesses

However, when it comes to working out VAT, you can make a lot of the process easier with us. With our smart OCR technology, you snap a receipt as soon as you spend, and we capture the data instantly, letting you organise your spend properly with built-in categorisation.

Maggie explains: "As a Payhawk accounting partner, we see first-hand how businesses can optimise their VAT reclaims by properly digitising expense tracking. Many companies unknowingly leave money on the table due to missing receipts or poor categorisation. With solutions like Payhawk, this process becomes automated and significantly more efficient, a game-changer for tax reclaim accuracy and compliance."

ATU, a German automotive company, saved over €2 million in just one year after switching to us, Mathias Goetz, Senior Project Manager at ATU, says:

We don’t chase receipts anymore. With Payhawk, our managers just take a picture, digitise it, and it’s in the system. In our first year, we recovered €2 million in VAT that would have been lost.

Past spend not categorised properly? You can backdate it using our integration with 60Dias.

Close the year smarter with Payhawk

While it may be too late to introduce processes to streamline the fiscal year close… you can make next year stress-free.

Automate your spend management, speed up reconciliation, and cut month-end close time in half with our seamless ERP and accounting integrations. Give your finance team more control and less admin. Book a personalised demo today and start the next fiscal year on the right foot.