If you run a company, there are always competing factors to consider when thinking about your year-end.
- Have you had a successful year and wish to reduce your tax?
- Are there cashflow pressures to think about?
- When do you plan to take dividends?
Here are some actions you might wish to think about in the approach to year-end…
Expenditure to reduce the Corporation Tax charge
Consider making a director pension contribution, though it is important to seek independent financial advice before you do so.
If you have Annual Investment Allowance (AIA) to spend, use it on a qualifying asset purchase in March (laptop, van etc). Be aware that from April 2026, the main writing down allowance falls from 18% to 14%, slowing tax relief for asset purchases not covered by the AIA.
Check your customer accounts to see if you have any bad debts to write off. If they are over six months old, you can also claim the VAT back if applicable.
Look diligently for accruals that may exist before your year-end. Accruals are items of expenditure that relate to the year but are invoiced after the year-end.
Consider whether your company would benefit from making a Research & Development or creative industry tax claim.
Gather information for business mileage and any other expenditure paid for privately that you haven’t claimed.
Other considerations before the 5 April personal tax year-end
Decide what dividend to declare in the year. It’s always good to declare dividends as you go and now would be a good time to determine what dividends you wish to declare. Remember to take advantage of the £500 tax free dividend allowance.
From 6 April 2026, the ordinary dividend rate for shareholders is increasing from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. Consequently, you may wish to consider paying dividends before 6 April 2026, subject to available profits within your company.
Consider the following when declaring dividends:
- Don’t declare dividends for more than the reserves that you have
- Ensure that the dividend is sufficient to keep the directors’ loan accounts in credit
- From a personal tax position, picking the right level of dividend may help you avoid paying tax at a higher rate or needing to pay back child benefit
Ensure that the salary you are paying yourself, as a director, is tax efficient for the new tax year. Should you need any assistance managing your company’s payroll, you may wish to engage our partner Apt Payroll Services, to ensure your processes run like clockwork.
Consider trivial benefits for directors and employees. HMRC allows directors to give themselves up to £300 per annum in trivial benefits. This includes gifts and non-cash vouchers (e.g. for shops or health/beauty treatments), as long as each transaction is no more than £50 including VAT. You can also give trivial benefits of up to £50 to your staff. There is no £300 tax year restriction for staff, but it must not be a performance reward, be part of a salary package, or included in their contract.
Need some assistance?
As always, if you are thinking about significant items of income, expenditure or asset purchasing near your year-end, please contact us for guidance, so you can make the best possible decision.
