Year-end tax-saving checklist for UK limited companies

Most of the tax savings available to a UK limited company depend on doing the right thing before the year-end, not after. Once the books close, the planning window has closed with them. Here is the checklist we run through with every KST client in the four to six weeks before their accounting year-end.

1. Review your salary / dividend mix

The optimal split depends on your personal circumstances, but for most owner-directors with no other income, paying a salary up to the secondary NIC threshold (currently £9,100) and taking the rest as dividends remains efficient. Above £100,000 of total personal income, the marginal rate jumps sharply because of personal allowance taper, that is usually the trigger for moving more into pension contributions instead.

2. Make employer pension contributions before year-end

Employer pension contributions are deductible against Corporation Tax in the year they are paid, not the year they accrue. Pay before year-end and you reduce this year's tax bill; pay after and you have to wait twelve months for the deduction. Annual allowance is £60,000 (subject to taper above £200k of adjusted income), and you can carry forward unused allowance from the previous three years.

3. Use the Annual Investment Allowance

The AIA gives you 100% tax relief on qualifying plant and machinery up to £1 million per year. If you are planning to buy equipment, vehicles (excluding cars), tools or computer hardware, doing so before year-end pulls the deduction into this year. Note: cars do not qualify for AIA, they go through the writing-down allowance pool at 18% or 6% depending on emissions.

4. Check whether full expensing applies

Since April 2023, full expensing gives 100% first-year allowance on most new and unused plant and machinery for companies, uncapped, so it applies above the £1m AIA limit too. Most SMEs will hit the AIA limit first, but for larger purchases full expensing is the relevant relief.

5. R&D tax relief, even if you "don't do R&D"

The merged R&D scheme that came in for accounting periods starting on or after 1 April 2024 has changed the rates and tightened the qualifying-activity definition, but the principle still applies: any work that resolves scientific or technological uncertainty can qualify. Software development, process engineering, and product design all routinely qualify and most directors are surprised to discover their work counts. The relief is meaningful, typically a 16% net benefit on qualifying spend for profitable SMEs.

6. Director's loan account, clear it within nine months

If you owe the company money at year-end (an overdrawn DLA), repay it within nine months and one day of year-end to avoid the section 455 charge, currently 33.75% on the outstanding balance. The charge is refundable when the loan is repaid, but it is a cash-flow drag worth avoiding. If you cannot repay in cash, declaring a dividend or bonus to clear the balance is the standard fix.

7. Time large dividends to fall in the right tax year

Dividends are taxed in the personal tax year they are paid, not declared. If you are close to a higher-rate or additional-rate threshold, deferring or accelerating a dividend by a few weeks can move the income into a more favourable year. The dividend allowance is £500 for 2025/26.

8. Charitable donations

Donations from the company to UK charities are deductible against Corporation Tax. Donations from you personally also work, with Gift Aid extending the relief into your higher-rate band. Pick whichever is more efficient given the income mix above.

9. Consider a trivial benefits run

Each employee (including directors) can receive up to £300 of trivial benefits a year tax-free, capped at £50 per benefit. Common uses: a small Christmas voucher, a birthday gift, a meal out. The conditions are tight (it cannot be cash, cannot be a reward for work, cannot be in a contract), but used properly it is an easy £300 of tax-free remuneration.

10. Health insurance, life cover, and relevant life policies

A relevant life policy paid by the company is deductible for Corporation Tax, is not a benefit-in-kind for the director, and pays out tax-free to the family. For a director-only policy with no group scheme, this is normally cheaper than personal life insurance bought from net income.

11. Review your VAT scheme

If turnover has grown significantly, the flat-rate scheme may no longer be optimal, most growing service businesses end up better off on standard VAT once their input VAT picks up. The threshold to leave the flat-rate scheme is £230,000 of VAT-inclusive annual turnover, but the optimisation review can happen at any point.

12. Get the Companies House and HMRC deadlines on a calendar

This is not strictly tax-saving, but late-filing penalties are pure loss. Companies House annual accounts: nine months after year-end for private companies. Corporation Tax: nine months and one day after year-end for payment, twelve months for the return. Confirmation Statement: annually, anniversary of incorporation. Set up calendar reminders six weeks before each.

The KST take

We run this checklist with every client in the run-up to year-end and write up a one-page summary of what we are recommending and why. If you would like the same treatment for your company before your next year-end, the free 30-minute consultation includes a quick scan against this list and an estimate of how much there is to save.

General guidance only. Tax rates and rules change, and this article reflects the position as at 30 April 2026. Talk to your accountant about your specific circumstances before acting on any of the above.