Year-end tax planning for limited companies is all about making the most of reliefs and allowances before the clock runs out. If your company’s financial year-end is on the horizon, now’s the perfect time to review your finances and make sure you’re not missing any golden opportunities to save tax. From pension contributions to equipment purchases, there are a number of strategic actions you can take to reduce your corporation tax bill and strengthen your business finances before the year wraps up.
Here are some effective, last-minute tax planning ideas for UK limited company directors.
Make a director’s pension contribution
One of the smartest moves in year-end tax planning for limited companies is making a pension contribution made by your company on your behalf.
Company pension contributions:
- Are treated as an allowable business expense, reducing your corporation tax liability
- Are not subject to National Insurance (either employer’s or employee’s)
- Don’t count as a taxable benefit-in-kind for the director
As long as the contribution is made “wholly and exclusively” for the purposes of the business, and within the relevant annual pension allowance (typically £60,000 unless reduced due to tapering or previous usage), it can offer excellent tax efficiency.
🕐 Timing is key – the payment must be made and cleared in your business bank account before the company’s year-end for it to be included in that year’s accounts.
📌 Tip: Use a proper pension scheme (like a SIPP or SSAS) and make sure the company pays the contribution directly.
Purchase equipment or tools (if you need them)
If there’s a business-critical purchase you were planning to make anyway, such as a new laptop, software, tools, or even a standing desk, bringing it forward to before your company’s year-end means you can claim the tax relief sooner.
Most capital purchases qualify for the Annual Investment Allowance (AIA), which gives 100% tax relief on qualifying expenditure up to £1,000,000 per year. This means you get the full value deducted from profits when calculating corporation tax.
🚫 Don’t be tempted to spend just for the sake of a tax deduction. If it’s not something the business genuinely needs, it won’t save money in the long run.
You can read more about the Annual Investment Allowance on GOV.UK.
Year-end tax tip: claim work-from-home expenses
If you regularly work from home as a director, you can claim a portion of your home running costs as a business expense.
You’ve got two options:
- Simplified method: A flat rate of £6 per week (£312 per year), no records needed
- Actual method: A proportion of your household bills (electricity, heating, broadband, rent/mortgage interest, etc.) based on the space used and time spent working
📌 For the actual method, make sure to keep good records and only claim a fair, justifiable portion—HMRC will expect you to be able to back it up if asked.
🔗 Need help working out what to claim? Try our work-from-home expenses calculator to get a quick estimate based on your setup.
Employ a spouse or family member (if they work in the business)
If your partner or family member helps with tasks like admin, bookkeeping, social media, or packing orders, you might be able to put them on the payroll.
The key here is genuine employment:
- The work must be real and necessary for the business
- The pay must be reasonable and reflect the duties they perform
- Payments must be processed through PAYE (with a payslip and RTI filing)
This can be a very tax-efficient way to reduce profits (and therefore tax) while also spreading income across the family’s tax allowances.
📌 Just make sure all employment rules are followed, and keep clear documentation of hours worked and duties performed.
Review the director’s loan account (DLA)
Have you borrowed money from your company during the year? If you owe the business money via your director’s loan account, you could be liable for additional tax unless it’s repaid within nine months of the year-end.
If not repaid, the company may have to pay Section 455 tax, currently 33.75% of the outstanding loan.
Options to avoid this include:
- Repaying the loan from personal funds
- Paying a dividend or salary to clear the balance (though this may create a personal tax liability)
- Writing off the loan (which can create additional tax consequences for both the company and the director)
📌 Best practice is to keep your DLA in credit or zero. If it’s overdrawn, take action now before your year-end, or plan to repay it within the nine-month window.
Check for any accruals or prepayments you can legitimately include
Depending on how your business operates, you might be able to include accrued expenses or prepaid costs in your accounts. For example:
- Accrued professional fees (like your accountant’s year-end work if it relates to the period)
- Prepaying software subscriptions or insurance for the year ahead
- Bonuses declared (but not yet paid) before year-end, if the obligation is clearly documented
These can all help reduce your profit for the year, meaning a smaller corporation tax bill, while still being fully within the rules.
Year-end planning tip: pay corporation tax early
If your company has cash available and you’ve got a good idea of what your corporation tax bill will be, it might be worth paying it early.
HMRC pays credit interest (called repayment interest) on early corporation tax payments. As of June 2025, the rate is currently 4.25% (subject to change). It’s calculated from the date you pay to the due date (usually nine months and one day after your company’s year-end).
So, by paying early, you:
- Take one task off your to-do list
- Earn a bit of interest (better than some business savings accounts!)
- Show HMRC you’re on top of your obligations
📌 Make sure your accountant agrees with the estimated tax figure before you pay, just in case anything changes when your year-end accounts are finalised.
See HMRC’s guidance on repayment interest for early corporation tax payments.
Final thoughts: don’t panic, plan
If your year-end is close and you haven’t looked at your tax position yet, it’s not too late—but time is of the essence. A short planning session with your accountant could uncover thousands in tax savings. Even small tweaks can make a big difference, especially when made consistently year on year.
👋 Need help with your year-end?
If you want to take advantage of any of these opportunities, let’s chat! We’ll help you review your options, crunch the numbers, and take action before your year-end cut-off.
If you’d like expert support with year-end tax planning for limited companies, book a quick call with the DNA team today, and we’ll help you wrap up the year in the most tax-smart way possible.