How to prepare your clients for the new tax year

The new tax year starts on 6 April, every year. And, a successful compliance approach starts at the beginning of the new tax year. Once your processes are in full swing, it’s hard to double back and switch systems or update your workflows to be more efficient. So, what you do in the early days of the 2025/26 tax year counts.

In this guide, we share everything you can do to prepare your clients and practice for the new tax year – so when busy season comes around, you already have things under control.

Why early preparation matters

Getting your practice and clients ready for the new tax year can save you stress and help with maintaining compliance throughout the year.

Clients will depend on you to educate them on changes to tax rates, reliefs, and industry updates. The sooner you get them onboard, the easier it will be to stick to the rules.

Preparing for the new tax year isn’t just about compliance – in some cases, it might help your clients access support where they need it. For example, your clients might be entitled to certain reliefs that you can claim on their behalf now, which could save them money. Things like Small Employers Relief, where clients can reclaim statutory pay through their payroll submissions. The earlier they know about this, the sooner they can claim it.

And, when it comes to tax time, if clients have been keeping the right records, it makes preparing tax returns much easier. There’s no need to catch them up at the last minute when you should be focused on getting compliance tasks done instead.

Talk to your clients about the tax year and any changes you expect will impact them. Sending email bulletins or scheduling a quick chat will help them stay in the loop.

Key tax changes for 2025/26

The new tax year 2025/26 comes with a handful of changes for you and your clients. These include:

• National Minimum Wage: The National Minimum Wage has increased for all age groups. The new National Living Wage (for those aged 21 and over) is £12.21, an increase of 6.7%. The rate for those aged 18-20 has also increased to £10, a 16.3% increase.
• Employer Class 1 NICs: Employer Class 1 National Insurance has increased from 13.8% to 15%
• Employment allowance: The amount that eligible employers can reduce their National Insurance liability by has more than doubled from £5,000 to £10,500.
• Small employers relief: The rate of small employers relief is increasing, and eligible employers will be able to claim 108.5% of statutory pay, up from 103%.
• Making Tax Digital: For sole trader and landlord clients earning above £50,000, this will be the last self assessment year before they need to use MTD for IT. MTD for IT begins for those earning above £50,000 from April 2026.
• Late payment penalties for VAT and voluntary (or trial) MTD for IT users: Interest on outstanding tax due is rising from 2% to 3% at 15 days and 30 days respectively. And the penalty on day 31 is rising from 4% to 10%.

Step-by-step checklist to get clients ready

Practices and clients can use the new tax year 2025/26 as an opportunity to make accounting and compliance obligations more straightforward. Here are some tips for doing just that:

1. Familiarise yourself with what’s changing. Check on new rules and regulations, and communicate them to clients who are affected. Make sure the rest of your team is up to speed, too
2. Start tax prep now. It’s never too early to get receipts, invoices, and other forms of evidence from clients. If you can reconcile their accounts as you go, there’ll be less to do come tax time. Data capture tools can speed up this process for you and your clients
3. Highlight this year’s deadlines to your clients. You could create a shared digital calendar for all of your clients, complete with the deadlines for VAT, Income Tax, Corporation Tax, and internal practice due dates
4. Ensure payroll systems are updated with the right amounts and percentages. Things like updating National Minimum Wage rates and National Insurance contributions. If your clients’ employees have been given a pay rise, this also needs to be updated in the system
5. Switch to digital record keeping – now is the perfect time to get your clients up to speed with cloud-based software and digital recordkeeping. Especially if they’re likely to fall within the scope of MTD for IT in the next few years, where digital recordkeeping is a requirement.

3 challenges accountants face at tax year-end

The end of the 2025/26 tax year might seem like a long way off, but the work you do now will have a significant impact on how straightforward (or stressful) the deadline is.

No doubt you’ll recognise some of the following tax year-end challenges:

• Last minute client responses: If clients aren’t providing evidence regularly, you can’t reconcile their accounts. And if you can’t reconcile their accounts, you can’t prepare their tax returns. This leads to rushed submissions and potential penalties for late returns and payments. Plus, you face the additional stress of chasing up client records.
• Time-consuming manual processes: Reconciling transactions, getting documents into accounting software, and drafting tax returns are essential compliance processes. But they can be repetitive and admin-intensive, costing practices time that could be better spent with clients. Without efficient processes, teams are stuck on admin tasks.
• Managing multiple clients and deadlines: Some clients will have more deadlines to meet than others – and depending on their accounting periods, you could be juggling internal and tax year deadlines. It’s easy to lose track of dates and miss a client query if you’re busy delivering the work.

Fortunately, all three of these challenges can be reduced for practices and clients, by using the right accounting software. Automation tools that take care of admin tasks for you and software that works for all different client types means you can use the same processes for everyone.

Accounting software like Xero gives access to simple data capture tools that make it easier for clients to provide documents on time. Clients can simply snap a photo of an invoice or receipt using their smartphone and email it to the software. And, time-consuming manual processes can be replaced with Xero features like bank feeds, which helps you get client transaction data into Xero without manually copying it across.

And, managing multiple clients in Xero couldn’t be easier. Our product for running your practice efficiently – Xero Practice Manager – gives you oversight of all clients and staff, so you can see which jobs are assigned to who and what their status is. Integrated with Xero Tax, our product for accounts and tax preparation, you can also see client deadlines in one place, making it easier to maintain compliance.

How Xero helps accountants streamline tax year-end

Xero can help you and your clients throughout the new tax year, but particularly at tax year-end, with:

• Automation: Our software streamlines manual tasks like uploading client transactions and calculating tax for you. So, you can spend less time working out the numbers, and more time helping your clients put their finances to work. With less time spent on manual admin, you can focus on finalising tax returns instead.
• Real-time collaboration: There’s no need to sign out of software before one of your team can take over. In fact, thanks to unlimited user features, you, your team, and your clients can collaborate in real-time on compliance tasks. Sharing the workload means less stress for everyone.
• Reporting and forecasting: With Xero, generating standard reports is simple. Our reporting tools use live transaction data in Xero, so you can give clients the most up-to-date view of their finances. This can be particularly helpful when it comes to tax planning, cash flow planning, and helping your clients make smarter financial decisions based on reliable data.
• Complete practice management: Never lose sight of what’s happening in your practice, thanks to Xero Practice Manager, our product for managing your team, time, and tasks. Assign jobs and view the status of specific tasks in one place. Generate reports on productivity, profitability, and work in progress in a few clicks.

Stay ahead with Xero

The extra effort you go to now could save your practice and your clients time and stress during tax season.

Once you’re clear on the changes for the 2025/26 new tax year, get your practice and clients up to speed. And spend some time setting up new systems and processes that make compliance less stressful.

Modern accounting software doesn’t just help compliance with legislation like Making Tax Digital or Companies House Reform – it can simplify practice and client operations, saving everyone time in the process.

When your team spends less time on admin, they have more availability for strategic work – like advisory services or tax planning, and helping clients make better financial decisions. You might even find that you have room to take on new clients or expand your services, since software takes care of the repetitive admin for you.

Xero accounting software has all the tools you need to take on the new tax year, and help your clients’ businesses thrive. Xero bookkeeping speeds up reconciliation with tools like reconciliation predictions, making admin less time consuming for you and your clients.

Returns in Xero Tax are auto populated and submitted to HMRC using data in Xero bookkeeping, saving you from having to copy data across. And, Xero Practice Manager gives you complete oversight of team tasks, capacity, and progress. So, you can handle compliance with a clear view of your clients and practice.