April has passed. The new UK tax year is underway. And for most founders and directors, the energy from Q1 has either carried forward or quietly stalled.
May is the right moment to pause, look at the numbers, and make sure your business is set up for the next three quarters. Not because something is wrong. But because a quick recalibration now can prevent a costly correction later.
This guide walks through what to review in May, what questions to ask your accountant, and how to use Q2 as a reset before the year gets away from you.
1. Why May Is the Right Time to Review
The UK tax year runs from 6 April to 5 April the following year. By the time May arrives, most businesses have completed one month of the new tax year and have real data to work with.
This is valuable. One month of actual figures gives you a baseline. You can see whether your January to March performance has carried forward, whether costs have shifted, and whether your opening cash position looks healthy.
Waiting until September or October to review means you have already lost half the year. By May, there is still time to adjust.
2. Start with Q1: What Actually Happened?
Before looking ahead, close out Q1 properly. Many UK SMEs carry loose ends from the previous tax year into April without realising it.
Questions to answer:
- Did you file your Q4 VAT return on time and accurately?
- Are your January to March management accounts reconciled?
- Were any large expenses recorded correctly against the right tax year?
- Did you make pension contributions before 5 April if planned?
- Is there any outstanding R&D or capital allowance work from 2024/25 still to claim?
Resolving these first gives you a clean foundation. Carrying forward unresolved items from the previous year creates confusion and increases the risk of errors when you file your corporation tax return.
3. Review Your 2025/26 Budget Against Reality
Most businesses set a budget at the start of the year. By May, that budget is between four and five weeks old, and in most cases, it needs updating.
What to check:
- Are your April revenue figures in line with the forecast?
- Have any costs changed since you set the budget, such as supplier price increases or NIC changes that came into effect from April 2025?
- Have any planned hires, investments, or projects been delayed or accelerated?
If your budget is already off by more than 10%, it is better to revise it now than to continue measuring against figures that no longer reflect reality.
4. Employer NIC Changes: Check Your Payroll Costs
From April 2025, employer National Insurance contributions increased to 15% on earnings above 5,000 per year, down from the previous 9,100 threshold. This change affects every UK business with employees.
If you have not already modelled the impact on your payroll costs for the full 2025/26 year, do it now. For businesses with multiple employees, the difference can be significant across twelve months.
Also confirm that the Employment Allowance has been correctly applied if your business is eligible. From April 2025, this increased to 10,500, which can offset a meaningful portion of your employer NIC liability.
5. Cash Flow: Project Forward to October
May is a good time to extend your cash flow forecast at least six months ahead. A six-month forward view gives you time to act before problems arrive rather than reacting when they do.
Key items to include in your forecast:
- PAYE and NIC payments due each month
- VAT returns for April to June, due by 7 August under standard quarterly filing
- Any corporation tax payments due in the year, particularly if your accounting period ends in the next few months
- Planned capital expenditure or asset purchases
- Customer payment patterns, especially if you carry long debtor days
A cash flow gap in August or September is manageable if you see it in May. The same gap discovered in July leaves little room to act.
6. Check Your Corporation Tax Position
If your accounting period ends on 31 March 2026, your corporation tax return is due by 31 March 2027 and payment is due nine months and one day after your year-end, which is 1 January 2027.
But you do not need to wait until then to understand your liability. A mid-year review of taxable profit, allowable expenses, and available reliefs gives you time to make decisions before the year closes.
Items worth reviewing with your accountant in May:
- Has all R&D activity been documented and are you eligible to claim under the Merged Scheme?
- Have all capital allowances, including the Annual Investment Allowance, been recorded correctly?
- Are there any loss relief opportunities from 2024/25 that could reduce your current year liability?
- Is your salary and dividend split still optimal given your current profit trajectory?
7. Set Three Goals for Q2
A financial review is only useful if it leads to action. Before finishing your May review, agree on three specific goals for the quarter from May to July.
These could be operational, such as reducing debtor days from 45 to 30. They could be financial, such as completing a clean set of management accounts each month. Or they could be compliance-related, such as getting your VAT and PAYE filings set up on a consistent schedule.
Three goals is enough. More than that and accountability becomes difficult to maintain.
Final Thoughts
Q2 is not a second chance. It is the quarter where the businesses that planned ahead start to separate from the ones that did not.
A one-hour review of your numbers in May, ideally with your accountant, can surface issues while there is still time to act. It costs very little. The alternative, discovering a problem in November, costs considerably more.
The businesses that do well at year-end are usually the ones that checked in at Q2.
Ready to Review Your Q2 Position?
Book a free 15-minute consultation with our UK accounting specialists at SustainEdge Global.
We will review your current figures, flag anything that needs attention, and help you build a clear plan for the rest of the year.
Book your free consultation today: https://sustainedgeglobal.com/uk/contact-us/
