Year-End Tax Planning Checklist for Directors

Tax planning done at year-end is always more limited than tax planning done during the year. But the months immediately before your company's financial year-end are still an important window — there are legitimate actions that can reduce your corporation tax bill, your personal tax position, or both, if you act before the year closes.

Two different year-ends to plan around

Directors have two planning deadlines each year that require different actions: the company's accounting year-end (which can be any date), and the personal tax year end (always 5 April). Both create time-sensitive opportunities. Missing either means losing planning options until the following year.

Company year-end checklist

1. Make employer pension contributions

This is almost always the highest-value action. Contributions must be paid before the year-end date — not just minuted or resolved. The money must leave the company bank account. If your profit is in the marginal CT band (£50,001–£250,000), each £1 of pension contribution saves 26.5p in CT — more than the main rate.

Check your carry-forward position (unused allowances from the previous 3 years) before deciding on the contribution amount. Large one-off contributions can be made if allowances are available.

2. Check the £50,000 CT rate threshold

Company profits below £50,000 are taxed at 19% (small profits rate). Profits above £50,000 enter the marginal band at an effective 26.5% on each additional pound. If your projected profit is £55,000, a £5,000 pension contribution costs the company £5,000 but saves £1,325 in CT — a 26.5% immediate return.

3. Purchase qualifying equipment

Equipment bought before year-end qualifies for the Annual Investment Allowance (100% deduction up to £1 million). A £3,000 laptop purchase before year-end creates an immediate £3,000 deduction — saving £570–£795 in CT depending on your rate. After year-end, the deduction goes into the following accounting period.

4. Prepay allowable expenses

Annual subscriptions, training courses, and professional memberships due in the new year can often be paid and deducted in the current period if paid before year-end. Review upcoming expenses and bring forward any that can be prepaid legitimately.

5. Review and clear the director's loan account

If your DLA is overdrawn at year-end, the 9-month clock starts ticking. Uncleared overdrawn balances attract the Section 455 tax charge (33.75%). Declare a dividend or bonus before year-end to clear the balance — or ensure it can be cleared within 9 months.

6. Review salary level

If you have not set or paid your salary this year, do so before year-end. The salary must be properly constituted (board minute, payroll submission) to be deductible in the correct period.

Worked example: year-end CT rate planning

Company has £70,000 profit before any year-end planning. Without action:

• CT on £70,000 (marginal relief band): approximately £15,575 (22.25% effective rate)

With a £20,000 employer pension contribution:

• Taxable profit: £50,000 (small profits rate boundary)
• CT at 19%: £9,500
• Saving: £6,075 in CT
• Net cost of the £20,000 pension: £20,000 − £6,075 = £13,925 to put £20,000 in the pension

Personal tax year checklist (by 5 April)

7. Use your £500 dividend allowance

If you have not yet received £500 in dividends in the current tax year, declare a dividend before 5 April to use the allowance. It is worth a maximum of £43.75 in saved tax at the basic rate — small, but free money.

8. Check adjusted net income against £100,000

If your total income for the year is approaching £100,000, you have a window before 5 April to make a personal pension contribution or Gift Aid donation to reduce your adjusted net income. Restoring even partial personal allowance saves 40p in tax for every £1 of allowance recovered.

9. Use your ISA allowance

The ISA allowance is £20,000 for 2026-27 — use it or lose it on 5 April. Investment growth and income inside an ISA is completely free of income tax and capital gains tax forever. For directors building wealth outside the company, an ISA is a critical tax-free wrapper.

10. Gather Self Assessment records

Before 5 April, ensure you have records of: all dividends received (with vouchers), all salary payments, any other income, Gift Aid donations made, and pension contributions. The Self Assessment return for 2026-27 is due by 31 January 2028 — but gathering records now while the tax year is fresh prevents mistakes later.

Common mistakes

• Resolving a pension contribution without paying it — a board minute alone is not enough. The money must leave the company account before year-end.
• Missing the equipment purchase window — buying a laptop or monitor one week after year-end pushes the CT deduction 12 months into the future.
• Not checking the £50k CT band — even a small profit reduction through pension or equipment can drop you from the 26.5% marginal rate to the 19% flat rate.
• Forgetting the ISA deadline — the 5 April ISA deadline is hard. Unused allowances cannot be carried forward.
• Leaving Self Assessment records until January — reconstructing a full year of dividends and income in January is stressful and error-prone. Keep running records throughout the year.