Mid-Year Accounting Checks

By the end of June, many small businesses and sole traders are six months into their accounting year. It’s the point when forecasts can be compared to actual performance, and when adjustments can prevent small issues from turning into bigger problems later on.

A mid-year check is not about reinventing the wheel. It’s about reviewing profit forecasts, keeping VAT compliance on track, and ensuring that cashflow is healthy enough to sustain growth and cover upcoming tax obligations.

Mid-Year Checks

Reviewing year-to-date figures against your original business plan highlights whether profits are on track. If income is higher, this could mean larger tax liabilities and more planning opportunities. If lower, it’s a chance to adjust spending, renegotiate contracts, or explore new revenue streams.

Many VAT-registered businesses will have their quarterly VAT return and payment due by 7 June 2025 (covering periods ending 30 April). Staying on top of VAT is crucial, especially for those close to the registration threshold or facing cashflow strain from paying VAT before receiving customer payments.

Summer is a pressure point for cashflow. For many businesses, staff holidays or slower demand can reduce income temporarily. At the same time, July’s Self-Assessment second payment on account (31 July 2025) looms, which can create additional pressure. A mid-year review ensures businesses plan liquidity around these pinch points.

How it impacts you

For sole traders, mid-year reviews provide clarity on how much tax to set aside ahead of the July and January Self-Assessment deadlines. A surprise tax bill is often the biggest source of stress and checking now removes that uncertainty.

Small businesses need to ensure their VAT obligations are under control. Late submissions or payments can attract penalties and interest, so mapping out due dates is vital. Property owners with mixed income sources should also review cashflow, as tax liabilities may be larger than expected if rental income has risen.

Contractors benefit from knowing how profit is trending. If contracts have been strong, setting aside additional funds for tax now avoids difficulty later. If work has been slower, a mid-year review can help recalibrate budgets and ensure spending is sustainable.

What you can do

If you filed your April VAT return in early June, use the data to refine forecasts for future quarters. For those nearing the VAT threshold, monitor turnover closely to avoid accidental non-compliance.

Compare your profit and loss to forecasts, and update tax projections for 2025/26. Factor in seasonal slowdowns and prepare for the 31 July 2025 Self-Assessment payment on account. Building this into your forecast avoids last-minute shortfalls.

At Ledgr Accountants, we help clients turn these mid-year reviews into clear action plans by adjusting tax strategies, ensuring VAT compliance, and strengthening cashflow planning.

Ish Mukit

Senior Accountant

References

1. https://www.gov.uk/self-assessment-tax-returns/deadlines

2. https://www.gov.uk/understand-self-assessment-bill/payments-on-account

3. https://www.gov.uk/submit-vat-return