Year-end tax planning – Your step-by-step guide

Get ahead with your year-end tax planning

How you approach your year-end tax planning can make such a difference to so many aspects of your business. Leaving it till the last minute isn’t an option and can prove really costly.

Now is the time to review your income, expenses, and tax liabilities – making sure it’s you who’s in control. Small changes, such as claiming expenses, making pension contributions, or structuring salary in a tax-efficient way, will make a big difference.

In this guide, we’ll take you through step-by-step everything you need to do before the year end.

Maximise allowable expenses

Claiming all business costs lowers taxable profit and reduces tax bills. Common deductible expenses include -

-        Office costs – rent, utilities, internet, and insurance.

-        Travel – fuel, transport, and accommodation for business trips.

-        Staff costs – salaries, pensions, training, and recruitment fees.

-        Equipment and software – computers, tools, and industry-specific programs.

-        Professional fees – accountancy, legal advice, and business memberships.

Do you work from home? Then, remember to claim the right portion of household bills. Keep records to support your claims.

Also, if cashflow will allow, buy any equipment you need before the tax year ends. You’ll be able to deduct costs through capital allowances, reducing taxable profits. 

Make pension contributions

Pension contributions lower taxable income while securing your financial future.

-        Personal pensions – Tax relief applies to contributions up to £60,000 or 100% of earnings.

-        Employer contributions – Reduce corporation tax if made through a limited company.

-        Carry forward allowances – Use any unused pension allowance from the past three years.

Contribute before the tax year-end to get relief in this period. If unsure how much to contribute, seek advice to avoid exceeding allowances.

Use your tax-free allowances

Make full use of allowances before they reset -

-        Personal allowance – Up to £12,570 is tax-free.

-        Dividend allowance – Take up to £500 in tax-free dividends.

-        Savings allowance – Earn interest tax-free up to £1,000 (basic rate) or £500 (higher rate).

-        Capital gains tax allowance – Use the £6,000 exemption before it drops to £3,000 next year.

-        Tax-free benefits – Reduce taxable income with perks like cycle-to-work schemes.

If you don’t use these allowances, you lose them. Adjust now to maximise savings.

Accelerate or defer income

Managing when you receive income will help lower tax liability -

-        Expect lower income next year? Bring forward income to use allowances before they reset.

-        Close to a higher tax band? Delay invoicing to keep income in a lower bracket.

-        Near a small business tax relief threshold? Deferring income may keep you eligible.

Balance this with cash flow needs—if delaying an invoice causes financial strain, securing payment sooner is better.

Plan for corporation tax changes

Corporation tax rates impact how much tax you pay. To minimise tax -

-        Know your rate – 25% for profits over £250,000, 19% for profits under £50,000, with tapered rates in between.

-        Bring forward expenses – Investing in equipment, staff training, or marketing now will reduce taxable profits.

-        Use capital allowances – Deduct the full cost of qualifying assets before the year-end.

-        Stay informed – Upcoming tax changes may introduce new deductions or increases.

Adjust spending accordingly to avoid paying more tax than necessary.

Review directors’ salaries and dividends

How you pay yourself affects your tax bill. A mix of salary and dividends is usually best -

-        Salary – Keeping it within the £12,570 personal allowance avoids income tax.

-        Dividends – The first £1,000 is tax-free; beyond that, tax rates start at 8.75%.

-        Balance both – A lower salary and higher dividends will often reduce overall tax.

-        Check corporation tax impact – Higher corporation tax rates reduce dividend savings.

An accountant will help structure your income in a tax-efficient manner. 

Consider R&D tax credits

If your business invests in innovation, you may qualify for R&D tax relief.

-        Does your project qualify? If you’ve solved technical problems or improved processes, you may be eligible.

-        Claimable costs – Includes staff wages, subcontractor fees, materials, and software.

-        Choose the right scheme – SMEs claim up to 86% of qualifying costs; larger firms use RDEC.

-        Keep records – Document project aims, technical challenges, and costs.

Many businesses miss out on R&D tax relief—check eligibility before the deadline. 

Settle outstanding tax liabilities

Avoid penalties by ensuring all taxes are up to date -

-        PAYE & National Insurance – Late payments lead to interest and fines.

-        VAT – Submit returns and payments on time. If nearing the £90,000 turnover threshold, check if you must register.

-        Corporation tax – Due nine months and one day after the accounting period ends. Plan ahead to avoid cash flow issues.

-        Self-assessment – If self-employed or a company director, ensure personal tax payments are made before 31 January.

If you’re struggling to pay, HMRC offers payment plans, but acting early gives you more options.

Speak to a tax advisor

Tax rules change regularly, and missing a key allowance or deadline will cost you. Speaking to a tax advisor before the year-end will help you -

-        Plan tax efficiently – An advisor will find ways to reduce your tax bill.

-        Stay compliant – Tax laws are complex, and errors lead to fines.

-        Maximise reliefs – Ensure you claim all allowances, from capital allowances to R&D tax credits.

-        Manage cash flow – Planning tax payments in advance prevents unexpected bills.

A short consultation with an advisor will ensure you’re making the right financial decisions.

And of course, that tax adviser should be one of our experts here at Liondaris!

Year-end tax planning isn’t just about cutting tax—it’s about keeping your business financially stable. Reviewing income, expenses, and tax liabilities now will help you save money and avoid last-minute stress.

Small adjustments, like claiming all expenses, structuring salary and dividends correctly, and using allowances, will make a big difference.

All these are our speciality. We’re always here to help. Contact us today