Year-end tax planning has two enemies: complacency and panic. Most companies do nothing for eleven months, then ring their accountant in late March hoping for a miracle. The miracles are usually small, because the genuine planning windows closed in autumn. Real tax planning runs all year and the year-end review is the consolidation, not the strategy.
Here is the checklist we work through with every limited-company client in the three months before their accounting reference date.
Corporation tax leverage points
Timing of expenditure
Tax-deductible expenses incurred before year-end reduce the current-year liability. Genuinely needed capital expenditure brought forward into the current period can claim 100% Annual Investment Allowance (AIA) — up to £1m of qualifying plant and machinery is fully deductible in year one. The phrase "genuinely needed" matters. HMRC has powers under the General Anti-Abuse Rule (GAAR) where transactions exist purely to manufacture tax outcomes.
Pension contributions
Employer pension contributions are deductible in the period paid, subject to the "wholly and exclusively" test. For an owner-director taking a low salary plus dividends, employer contributions remain one of the most efficient extraction routes. The annual allowance is £60,000 (2024/25 rules — verify the current year), with unused allowance carry-forward of up to three prior years.
R&D tax relief
The merged scheme now applies for accounting periods beginning on or after 1 April 2024. Document the technological uncertainty and the systematic approach in real time. Retrospective documentation drafted in March looks exactly like what it is and increases enquiry risk.
Group relief and loss planning
Surplus losses in one group company can be surrendered to a profitable sister company subject to the consortium and group relationship rules. If you have a group, year-end is the moment to model the optimal allocation.
Owner-director personal extraction
- Salary versus dividend mix. The optimal salary for a director with no other income is usually pitched to maintain National Insurance qualifying years (currently the lower earnings limit) without breaching the secondary threshold for employer NI. Confirm against current thresholds.
- Dividend timing. Dividends declared and paid before personal year-end (5 April) fall in the current tax year. Where possible, plan across personal years to keep within the basic rate band where the dividend rate is 8.75%.
- Spouse/civil partner planning. Where genuine commercial involvement exists, shareholding allocation and dividend planning can use both personal allowances and basic rate bands. Settlement rules apply — get this advised, not improvised.
- ISA and pension topping-up. Tax-efficient personal wrappers should be at the maximum before 5 April. £20,000 ISA, £60,000 pension (less the relief tapering for very high earners).
Capital gains and disposals
- Bed and spouse remains a viable technique for using the annual exempt amount.
- Business Asset Disposal Relief (BADR) reduces CGT to 14% on qualifying disposals up to £1m lifetime allowance — verify current rate, which has moved.
- EIS and SEIS deferral and reinvestment relief can offset gains where appetite exists.
VAT and indirect tax
- Review scheme selection annually — particularly the Flat Rate Scheme limited-cost-trader status
- Bad debt relief — VAT on debts over 6 months old can be reclaimed
- Partial exemption calculations updated where applicable
Employment tax housekeeping
- Benefits in kind — confirm whether to payroll or report on P11D
- Employment-related securities — file ERS returns for any share-based arrangements (deadline 6 July)
- EMI option grants — annual notification to HMRC required
- Off-payroll working (IR35) — review status determinations for contractors
The two-meeting structure
Effective year-end planning is two meetings, not one:
- Three months out (the planning meeting): Run forecasts, identify which levers to pull, agree actions with deadlines. This is where real money is made.
- One month before year-end (the execution check): Confirm actions are happening. Anything still outstanding either gets actioned this week or accepted as a missed opportunity.
What we deliver
Our tax planning engagements include both meetings, the forecast model, the action list, and the documentation HMRC will want to see if any of these positions are queried. Personal tax planning sits alongside the company work — see also our self assessment service for owner-directors who need the personal and corporate sides joined up.
If you have a March or April year-end and want a planning meeting before the window closes, book a slot — we keep January and February slots open specifically for this.