Year-End Tax Planning Checklist for Limited Company Directors (2025/26)

As a UK limited company director, you have two year-ends to think about: your company's accounting year-end and the personal tax year ending 5 April. Getting your planning right around both dates can save thousands in tax, but the window of opportunity closes fast.

This comprehensive checklist covers everything you need to action before 5 April 2026 to maximise reliefs, time your income correctly, and reduce your overall tax bill.

Understanding the Two Year-Ends

Most directors conflate their company year-end with the personal tax year. They are different, and each offers distinct planning opportunities.

Key insight: Your company year-end determines when Corporation Tax crystallises. The personal tax year determines when you pay Income Tax and Capital Gains Tax on your personal income.

If your company year-end is 31 March, both dates almost align. If it is 31 December, you have a 3-month gap where dividend timing becomes particularly important.

Before 5 April Checklist: Personal Tax Planning

These actions must be completed before midnight on 5 April 2026. Once the date passes, these opportunities are gone for this tax year.

Use Your Dividend Allowance

• Check if you have used your £500 dividend allowance this tax year
• If not, declare a dividend before 5 April to use it
• Ensure you have sufficient distributable reserves

Why it matters: The dividend allowance does not carry forward. If you do not use the £500 by 5 April, you lose it. That is £43.75 in tax saved (£500 x 8.75%) with minimal effort.

Contribute to Your ISA

• Check current ISA contributions for 2025/26
• Top up to the £20,000 limit if possible
• Consider Stocks and Shares ISA for growth potential

Why it matters: The £20,000 ISA allowance resets on 6 April. Any unused allowance is lost forever. ISA growth is completely tax-free, making it one of the most valuable allowances available.

For a director extracting £60,000 annually, funding a Stocks and Shares ISA at £20,000 per year creates a substantial tax-free pot. Over 10 years at 7% growth, that becomes approximately £295,000 - all completely exempt from Income Tax and Capital Gains Tax. See our Stocks and Shares ISA guide for more details.

Review Your Salary Level

• Confirm you have taken at least £12,570 salary (or your chosen optimal amount)
• Ensure all payroll RTI submissions are up to date
• Verify you are building State Pension qualifying years

Why it matters: The optimal director salary for 2025/26 is typically £12,570 - the Personal Allowance threshold. This provides Corporation Tax relief for your company, builds State Pension credits, and costs nothing in Income Tax.

If you have not paid yourself this amount, backpay before the tax year ends. See our director's salary guide for the full breakdown.

Personal Pension Contributions

• Calculate unused Annual Allowance for this year (£60,000 maximum)
• Check carry forward availability from previous three years
• Make personal contributions before 5 April if needed

Why it matters: Personal pension contributions receive basic rate tax relief automatically (20%). Higher and additional rate taxpayers claim extra relief through Self Assessment.

However, for limited company directors, employer contributions through the company are usually more tax-efficient. See the company pension section below.

Gift Aid Donations

• Review charitable donations made this tax year
• Ensure Gift Aid declarations are in place
• Claim higher rate relief through Self Assessment

Why it matters: If you are a higher rate taxpayer, Gift Aid donations provide additional 20% relief claimed through Self Assessment. A £1,000 donation effectively costs a 40% taxpayer just £600.

Capital Gains Tax Planning

• Use your £3,000 CGT annual exemption before it resets
• Consider "bed and ISA" to crystallise gains tax-free
• Review any losses to offset against gains

Why it matters: The CGT annual exemption dropped significantly to £3,000 for 2024/25 onwards. If you have investments with gains, consider selling to use the exemption before 5 April.

Dividend Timing: Before or After 5 April?

One of the most impactful decisions is when to declare your next dividend. The tax year boundary on 5 April creates a natural planning opportunity.

Declare Before 5 April If:

• You have not used your £500 dividend allowance
• Your total income will stay within the basic rate band (£50,270)
• You need the cash in this tax year
• Your income will be higher next tax year

Declare After 6 April If:

• You have already used your dividend allowance
• Additional dividends would push you into higher rate (33.75%)
• You expect lower income next tax year
• You want to use next year's dividend allowance first

Dividend Timing Comparison

The key question: Will this dividend push you over £50,270 total income? If yes, consider waiting until 6 April to reset your tax bands.

For comprehensive guidance on dividend timing, see our dividend timing strategy guide.

Company Pension Contributions: The Most Powerful Tool

If your company has profits to spare, pension contributions offer unmatched tax efficiency.

Before Company Year-End

• Calculate available profit after expenses
• Determine optimal pension contribution amount
• Make contribution at least 5-10 days before year-end (to allow processing)
• Document with board minutes

Before 5 April (Personal Tax Year)

• Verify contributions will count against this tax year's Annual Allowance
• Check carry forward availability from 2022/23, 2023/24, 2024/25
• Ensure contributions do not exceed Annual Allowance limits

Pension Contribution Tax Savings

Note: The Employer's NI saving is compared to taking the equivalent as salary. Pension contributions bypass NI entirely.

Carry Forward Rules

You can use unused Annual Allowance from the previous three tax years, but only after using the current year's allowance first. You must have been a member of a registered pension scheme in each year you want to carry forward from.

Action: Review your pension statements for each year. Any unused allowance can be "filled" with contributions before 5 April 2026.

For complete guidance, see our pension contributions guide.

Capital Allowances: Equipment Purchases Before Year-End

The Annual Investment Allowance (AIA) lets you deduct 100% of qualifying equipment costs immediately. Timing purchases before your company year-end accelerates tax relief by 12 months.

Capital Allowances Checklist

• Review planned equipment purchases for next 6 months
• Assess whether purchases can be accelerated to before year-end
• Ensure equipment is purchased AND available for use before year-end
• Check for any unclaimed capital allowances on existing assets

What Qualifies for AIA (100% Relief)

Car Capital Allowances

Cars do not qualify for AIA, but you can claim:

If you need a vehicle, electric cars purchased before year-end provide 100% relief immediately. See our electric car guide.

Trivial Benefits: Use Your £300 Allowance

As a director of a close company, you can receive up to £300 per tax year in trivial benefits - completely tax-free.

Trivial Benefits Checklist

• Calculate trivial benefits already received this tax year
• Plan remaining benefits up to £300 (6 x £50 maximum)
• Document each benefit separately
• Ensure benefits are not rewards for specific work

Example Trivial Benefits

Remember the rules:

• Each benefit must be under £50
• Cannot be cash or cash vouchers
• Cannot be contractual or reward for work
• Director limit is £300 per tax year

If you have not used your allowance, purchase gift cards before 5 April. It is free money. See our trivial benefits guide for full details.

Director's Loan Account: Clear Before 9 Months

If your director's loan account (DLA) is overdrawn - meaning you owe the company money - you face Section 455 tax at 33.75%.

DLA Checklist

• Check current DLA balance
• If overdrawn, plan to clear within 9 months of your year-end
• Ensure expenses are properly allocated to reduce the balance
• Consider declaring a dividend to offset the loan (if profits permit)

Section 455 Tax Timeline

Example: Your company year-end is 31 March 2026. If your DLA is overdrawn by £10,000 on that date and you do not repay it by 31 December 2026 (9 months later), you owe £3,375 in Section 455 tax.

The tax is eventually refunded when you repay, but it is a painful cash flow hit. Better to clear the loan properly.

Warning on "bed and breakfasting": HMRC catches directors who repay loans just before year-end and borrow again shortly after. You must stay out of debt for at least 30 days to avoid the anti-avoidance rules.

For complete guidance, see our director's loan account guide.

Employment Allowance: Are You Claiming It?

The Employment Allowance reduces your Employer's National Insurance bill by up to £10,500 per year. Many eligible companies do not claim it.

Employment Allowance Checklist

• Confirm eligibility for Employment Allowance
• Check that the claim is active on your payroll
• Review if the claim has been applied correctly

Eligibility Requirements

You can claim if:

• You have at least one employee (besides the director) earning above £5,000
• OR you have multiple directors where at least one earns above the Secondary Threshold
• Your total Employer's NI bill in the previous tax year was under £100,000

You cannot claim if:

• You are a sole director with no other employees
• All employees earn below £5,000
• Your company's primary business is providing personal services (IR35 restrictions apply)

If eligible: Ensure the claim is active. This is worth up to £10,500 per year - substantial for any company with employees.

Spouse Employment: Review Salary and Pension

If your spouse helps with the business, their salary creates additional tax planning opportunities.

Spouse Employment Checklist

• Verify your spouse performs genuine work for the company
• Review their salary level (consider £12,570 to use their Personal Allowance)
• Consider pension contributions for them
• Ensure proper employment documentation is in place

Spouse Salary Tax Benefits

Requirements:

• Work must be genuine (bookkeeping, admin, marketing, etc.)
• Salary must be reasonable for the work done (market rate)
• Proper payroll must be operated with RTI submissions

Pension opportunity: Your company can also contribute to your spouse's pension. This doubles your family's pension allowance while still providing Corporation Tax relief.

For detailed guidance, see our employing family members guide.

Loss Planning: Carry Back or Forward?

If your company has made a loss, or is heading towards one, you have options for how to use it.

Loss Utilisation Options

Loss Planning Checklist

• Calculate projected loss for the current year
• Review previous year's Corporation Tax paid
• Decide whether to carry back (cash refund) or forward (future relief)
• Document the claim correctly in your CT return

Timing consideration: Losses can be carried back 12 months. If you made substantial profits last year, a loss this year generates a cash refund that could be valuable for your business.

R&D Tax Credits: Do Not Miss the Deadline

R&D tax credits remain one of the most under-claimed reliefs for UK companies. If your business involves any technical development work, you may qualify.

R&D Tax Credits Checklist

• Review development activities from the past two years
• Identify any technical uncertainty you have overcome
• Calculate qualifying expenditure (staff costs, subcontractors, consumables)
• File claims before the deadline (2 years from your year-end)

What Qualifies

Your work may qualify if you have been:

• Developing new products, processes, or services
• Improving existing products beyond normal incremental updates
• Overcoming technical challenges with uncertain solutions
• Building bespoke software or systems

Common misconception: "R&D is just for scientists." Wrong. Software development, engineering solutions, and process innovation all qualify.

Current R&D Tax Relief Rates (Merged Scheme from April 2024)

Deadline: R&D claims must be filed within 2 years of your accounting period end. Do not let valid claims expire.

For detailed guidance, see our R&D tax credits guide.

VAT: Check Your Scheme Is Still Optimal

If you are VAT registered, your choice of scheme affects cash flow and compliance burden. Year-end is a good time to review.

VAT Scheme Comparison

VAT Checklist

• Review current VAT scheme effectiveness
• Calculate whether a different scheme would save money
• Check VAT threshold (£90,000 from April 2024)
• Consider voluntary registration if below threshold but reclaiming VAT

Flat Rate Scheme review: The Flat Rate Scheme can be excellent for service businesses with few purchases. However, the rates vary by sector. If your sector rate does not benefit you, standard accounting may be better.

For a complete comparison, see our VAT schemes comparison guide.

Personal Tax: Gift Aid and Pension Relief Claims

If you are a higher or additional rate taxpayer, ensure you claim all available relief through Self Assessment.

Higher Rate Tax Relief Checklist

• Gather all Gift Aid donations for the tax year
• Calculate personal pension contributions (not employer contributions)
• Review any professional subscriptions eligible for relief
• Consider additional voluntary contributions to gain relief

How Higher Rate Relief Works

Note: Employer pension contributions do not need claiming through Self Assessment - the tax relief is already embedded because the company paid gross.

Month-by-Month Countdown: March Actions

With 5 April approaching, here is your week-by-week action plan for March 2026.

Early March (1-10 March)

• Review current dividend position and tax bands
• Calculate ISA contribution headroom
• Check pension allowance usage
• Review director's loan account balance

Mid-March (11-20 March)

• Make pension contributions (allow processing time)
• Order equipment for capital allowances (must arrive and be in use before year-end)
• Declare dividends if using allowance
• Purchase trivial benefits if allowance unused

Late March (21-31 March)

• Complete ISA top-up
• Final dividend declaration if needed
• Clear or reduce director's loan if overdrawn
• Final review of all allowances

First Week of April (1-5 April)

• Last chance for ISA contributions
• Last chance for dividend declarations in this tax year
• Confirm all payments have cleared
• Document all year-end decisions

Frequently Asked Questions

What is the difference between my company year-end and the tax year?

Your company year-end is the date you chose when incorporating (or changed since). It determines when your company's profits are calculated for Corporation Tax purposes. The personal tax year always runs 6 April to 5 April and determines when you personally pay Income Tax, Capital Gains Tax, and when allowances like the ISA and dividend allowance reset.

When should I declare dividends for maximum tax efficiency?

If you have not used your £500 dividend allowance, declare before 5 April. If additional dividends would push you into the higher rate band (above £50,270 total income), consider waiting until 6 April to access new tax bands and a fresh allowance.

Can I make pension contributions after my company year-end but before 5 April?

Yes, if your company year-end is before 5 April (e.g., 31 December or 31 January). The pension contribution will count in a new company accounting period for Corporation Tax relief, but against the current personal tax year for your Annual Allowance.

How much should I pay my spouse for helping with the business?

If your spouse does genuine work, paying them up to £12,570 (the Personal Allowance) provides Corporation Tax relief for the company while they pay no Income Tax. The salary must be justifiable for the work performed. HMRC may challenge inflated salaries for minimal work.

What happens if I miss the 5 April deadline for ISA contributions?

You permanently lose that year's £20,000 allowance. It does not carry forward. If you had planned to invest £20,000 but only contributed £15,000, you cannot contribute the missing £5,000 in future years.

Is it worth making small pension contributions for the carry forward?

Yes. Even a £1 contribution in a tax year means you were "a member of a registered pension scheme" in that year, which is required to use carry forward. If you think you might want to make large contributions in future years, maintain pension membership.

How do I know if my company qualifies for R&D tax credits?

If you have overcome any technical uncertainty - in software, engineering, manufacturing, or scientific processes - you may qualify. The key test is whether a competent professional in your field would consider the solution uncertain at the outset. Most software development and product improvement work qualifies.

Should I clear my director's loan account before year-end or within 9 months?

Ideally before year-end, so it never triggers Section 455. If that is not possible, you have 9 months after year-end to repay and avoid the tax charge. But remember the 30-day "bed and breakfasting" rule if you repay and borrow again.

How AccountsOS Helps with Year-End Tax Planning

Year-end planning requires visibility into your numbers well before the deadline. AccountsOS gives you real-time insight into your tax position.

Live Profit and Tax Tracking

See your estimated Corporation Tax liability update as transactions flow in. Know exactly where you stand before making year-end decisions.

Allowance Monitoring

AccountsOS tracks your dividend allowance, pension contributions, and ISA headroom. Get alerts when allowances are about to expire unused.

Intelligent Suggestions

Ask questions in plain English: "How much pension contribution headroom do I have?" or "What's my tax if I take a £30,000 dividend before April?"

Deadline Alerts

Never miss a tax deadline. AccountsOS reminds you 8 weeks before key dates with personalised action items based on your company's position.

Scenario Modelling

Test different strategies before committing. Compare dividend timing, pension contributions, and salary levels to find your optimal tax position.

Year-End Tax Planning Summary

The weeks before 5 April represent your biggest personal tax planning opportunity. The key actions are:

Must Do:

• Use your £500 dividend allowance
• Top up ISA to £20,000 if affordable
• Review salary and pension position
• Clear or plan for director's loan account

Should Review:

• Dividend timing across tax year boundary
• Spouse salary and pension opportunities
• Capital allowances on equipment purchases
• R&D tax credit eligibility

Check Annually:

• Employment Allowance claim status
• VAT scheme suitability
• Loss utilisation strategy
• Higher rate relief claims

Start your planning in early March to give yourself time to implement. By 5 April, most opportunities close permanently for this tax year.

Tax rules change frequently. This article reflects UK tax law as of January 2026. Always verify current rates with HMRC or consult a qualified accountant for advice specific to your situation.