Year-End Tax Planning: The Actions Every Business Owner Should Take Before 31 December

For limited company directors, October is a sensible time to review whether your current salary and dividend combination remains optimal for the full year. If your profits are tracking higher or lower than expected, the ideal remuneration split may have shifted.

With Employer's National Insurance at 15% and the dividend allowance reduced to £500, the gap between salary and dividend taxation is tighter than it has historically been. A conversation with your accountant now can ensure you finish the year in the most tax-efficient position possible.

Employer pension contributions are deductible against Corporation Tax in the accounting period in which they are paid — provided they represent a genuine business expense and are processed before the year end. For business owners with surplus profits who want to reduce their tax bill while building long-term wealth, pension contributions are one of the most tax-efficient tools available.

The Annual Allowance for pension contributions in 2026/27 is £60,000 (including employer and employee contributions combined). Unused allowance from the previous three years can also be carried forward, potentially allowing larger contributions in a single year.

It sounds obvious, but many business owners reach year end with unclaimed expenses sitting in personal bank accounts or receipts that were never recorded. October is the time to conduct a thorough review:

• Have you claimed mileage for all business-related travel?
• Are subscriptions, professional memberships, and software costs fully recorded?
• Have home office costs been claimed if you work from home?
• Are any pre-trading expenses from earlier in the year included?

Small omissions add up. If your marginal Corporation Tax rate is 25%, an unclaimed £1,000 expense costs your business £250 in unnecessary tax.

If your business has any outstanding debts that are unlikely to be recovered, writing them off before the year end means you can claim bad debt relief against your Corporation Tax bill. This requires the debt to be formally written off in your accounts — simply acknowledging that payment is unlikely is not sufficient.

Review your aged debtor list now and have a frank conversation with your accountant about any balances that may meet the criteria.

Year-end planning is not just about reducing this year's tax bill. It is also about setting up the following year intelligently. Decisions made now about structure, staffing, investment, and remuneration can have a compounding effect on your financial efficiency over time.

October is the ideal month to have your year-end planning conversation. Our South Wales team works with businesses across the region to make sure every available relief is claimed and every planning opportunity is used. Get in touch today on 01443 834047, email info@fooks.co.uk or visit our contact page.