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As your company’s financial year end approaches, it is important to review your finances and tax position to ensure you are not paying more tax than necessary. Good year end planning can help improve cash flow, maximise reliefs, and reduce unexpected tax bills.
This checklist highlights key areas UK limited companies should review before their accounting period closes.
Review Profit Levels and Corporation Tax Position
Corporation Tax is currently charged at:
• 19% for profits up to £50,000
• 26.5% marginal rate between £50,000 and £250,000
• 25% for profits above £250,000
Before your year end, estimate your taxable profits and consider whether adjustments can legitimately reduce your tax liability.
Planning early allows time to claim additional expenses, make pension contributions, or adjust director remuneration.
Check Allowable Business Expenses
Ensure all business costs are fully recorded and claimed. Commonly missed expenses include:
• Staff training and professional development
• Software subscriptions and cloud accounting costs
• Business insurance policies
• Travel and mileage
• Use of home as office
• Professional fees including accountancy and legal costs
Expenses must meet HMRC’s “wholly and exclusively” rule to be allowable.
Consider Capital Allowances and Equipment Purchases
If your company needs new equipment, machinery, or IT hardware, buying before the year end may allow you to claim tax relief sooner.
The Annual Investment Allowance currently allows 100% tax relief on qualifying purchases up to £1 million per year.
This can significantly reduce taxable profits if timed correctly.
Review Director Salary and Dividend Strategy
Balancing salary and dividends remains one of the most tax-efficient ways to extract profit from a limited company.
Points to review include:
• Whether salary is set at an optimal tax and National Insurance level
• Availability of distributable reserves for dividends
• Personal tax thresholds for directors and shareholders
• Timing of dividend payments across tax years
Each company and director’s circumstances differ, so personalised planning is essential.
Make Pension Contributions
Company pension contributions are usually:
• Allowable for Corporation Tax
• Free from National Insurance
• Tax efficient for directors
Making pension contributions before year end can reduce taxable profits while supporting long-term financial planning.
Write Off Bad Debts
If customers are unlikely to pay outstanding invoices, these debts may be written off and claimed as an expense.
This reduces taxable profits and ensures your accounts reflect realistic income levels.
Claim Research and Development (R&D) Relief (If Applicable)
If your company invests in innovation, product development, or improving processes, you may qualify for R&D tax relief.
Many businesses overlook this relief, particularly in sectors such as:
• Technology
• Manufacturing
• Construction
• Engineering
• Software development
Review Director Loan Accounts
If directors owe money to the company, this could trigger additional tax charges.
Loans outstanding nine months after the year end may result in Section 455 tax at 33.75%.
Review balances early to consider repayment or restructuring options.
Utilise Loss Reliefs
If your company has made losses, you may be able to:
• Offset losses against current profits
• Carry losses forward
• Carry losses back to previous accounting periods
Loss planning can generate valuable tax savings and refunds.
Check VAT and PAYE Compliance
Year end is a good time to review:
• VAT returns and potential errors
• PAYE submissions and payroll accuracy
• Benefits in kind reporting
• Employment Allowance eligibility
Fixing issues early reduces risk of HMRC penalties.
Plan for Upcoming Tax Changes
Tax legislation changes frequently. Businesses should review upcoming changes affecting:
• Corporation Tax rates
• Capital allowances
• Dividend taxation
Planning ahead prevents unexpected compliance issues.
Why Year End Planning Matters
Waiting until after your year end limits your tax planning options. Taking action before your accounting period closes gives you far greater control over your tax position and overall financial strategy.
How Taxes Done Right Ltd Can Help
At Taxes Done Right Ltd, we support limited companies with proactive tax planning, not just year end compliance. We help business owners reduce tax, improve efficiency, and plan for future growth.
