Limited Company Year-End Tax Planning: The Complete Action Checklist

Limited company year-end tax planning means taking deliberate action in the final two to three months before your accounting period closes to reduce corporation tax, through measures such as accelerating allowable expenses, making employer pension contributions, and timing capital purchases, all of which must be completed before the year-end date. Once that date passes, several planning opportunities close permanently, because a company's accounting period is fixed to its chosen year-end and cannot be extended retrospectively. These techniques are not reserved for large businesses; the same moves that reduce corporation tax for bigger companies are equally available to small, owner-managed ones. This guide is written by Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, and sets out the key actions for the 2026/27 tax year.

Key Takeaways

• For 2026/27, corporation tax is 19% on profits up to £50,000 and 25% on profits above £250,000, with marginal relief applying in between.
• A deductible expense incurred on the last day of your accounting period reduces this year's taxable profit; one day later it reduces next year's instead.
• Employer pension contributions are fully deductible against corporation tax, with no NI, and a £20,000 contribution saves £5,000 in tax at the 25% rate.
• The director's total pension input must stay within the £60,000 annual allowance for 2026/27, subject to tapering above £260,000 adjusted income.
• The Annual Investment Allowance gives 100% first-year relief on qualifying plant and machinery up to £1,000,000 in the period of purchase.
• Delaying a dividend past 5 April 2027 can keep income in the basic rate band, taxed at 10.75% rather than 35.75%.

Why Is Your Year-End Date the Starting Point for Corporation Tax Planning?

Your year-end date is the starting point because corporation tax is charged on the profits of each accounting period, so the timing of an expense determines which tax year it falls into.

For 2026/27, the rate is 19% for companies with annual profits up to £50,000 and 25% for profits above £250,000, with marginal relief applying in between.

A deductible expense incurred on the last day of your accounting period reduces this year's taxable profit. The identical expense incurred the following day reduces next year's profit instead. That distinction, applied across several types of expenditure, can materially affect the tax you owe and when you owe it.

Reviewing your profit position in the final two to three months of the accounting period, and deciding whether planned spending should be brought forward, is the essence of year-end planning.

How Can You Accelerate Allowable Expenses Before the Period Closes?

You accelerate allowable expenses by bringing forward business expenditure you were already planning to incur, such as professional subscriptions, software renewals, marketing spend, training, and insurance premiums, so the deduction falls in the current period.

To qualify, expenses must be incurred wholly and exclusively for business purposes and must be incurred, or properly accrued, before the year-end date.

A worked example: a company with taxable profits of £85,000 brings forward £7,000 of planned spend into the current period. At the marginal rate of approximately 26.5%, this reduces the corporation tax charge by around £1,855. No additional cost is incurred as the spending was planned anyway.

Every expense must be commercially genuine. HMRC does not accept arrangements where expenditure is manufactured purely to reduce taxable profit without any underlying business purpose.

How Do Employer Pension Contributions Reduce Corporation Tax at Year-End?

Employer pension contributions reduce corporation tax because, provided they are wholly and exclusively for the purposes of the business, they are fully deductible, carry no National Insurance, and do not form part of the director's personal income.

At the 25% corporation tax rate, a £20,000 employer contribution saves the company £5,000 in tax. The funds enter the pension wrapper outside the reach of income tax and dividend tax. For a director already drawing an efficient salary and taking dividends, this is often the most tax-efficient remaining option.

The contribution must be actually paid before the accounting year-end. An accrual is not sufficient. The director's total pension input must also remain within the Annual Allowance of £60,000 for 2026/27, subject to tapering for those with adjusted income above £260,000.

How Should You Time Dividends Around Year-End and the Personal Tax Calendar?

Dividends do not reduce the company's corporation tax charge because they are not deductible, but their timing directly affects the director's personal tax position, so they should be planned around both the company year-end and the 5 April tax-year boundary.

If a director is approaching the higher rate threshold before 5 April 2027, delaying a dividend until after that date pushes the income into the following tax year. This can preserve basic rate treatment at 10.75% rather than 35.75%. Conversely, if there is unused dividend allowance (£500 for 2026/27) or remaining basic rate capacity, extracting a dividend before the company accounts deadline may use those allowances rather than waste them.

Reviewing both the company's current-year profit and the director's personal income position together is essential before making this decision.

How Can Capital Allowances Cut Your Corporation Tax Bill?

Capital allowances cut your bill through the Annual Investment Allowance (AIA), which gives 100% first-year relief on qualifying plant and machinery up to £1,000,000 in the period of purchase.

A £14,000 piece of equipment bought before year-end generates a £14,000 deduction in this period. The same purchase made one day after year-end moves that relief into next year's accounts.

Qualifying assets include computers, machinery, office furniture, and certain fixtures. Where a purchase is commercially needed and planned, timing it before year-end is straightforward. Just ensure the company accounts deadline is not used as the sole justification for an otherwise unplanned purchase.

Frequently Asked Questions

What is the corporation tax rate for 2026/27?

For 2026/27, corporation tax is charged at 19% for companies with annual profits up to £50,000 and 25% for profits above £250,000, with marginal relief applying to profits in between. Because the tax is charged per accounting period, the timing of your income and deductible expenses around the year-end date directly affects how much you pay and when.

How much corporation tax does an employer pension contribution save?

An employer pension contribution is fully deductible against corporation tax, so at the 25% rate a £20,000 contribution saves the company £5,000 in tax. It also carries no National Insurance and does not form part of the director's personal income. The contribution must be paid in cash before the year-end, and the director's total pension input must stay within the £60,000 annual allowance for 2026/27.

Should I take a dividend before or after the company year-end?

Dividends do not reduce corporation tax, so timing is about your personal tax, not the company's. If you are near the higher rate threshold before 5 April 2027, delaying a dividend into the next tax year can keep it taxed at 10.75% rather than 35.75%. If you have unused dividend allowance (£500 for 2026/27) or basic rate capacity, taking a dividend now may avoid wasting it.

What is the Annual Investment Allowance limit for 2026/27?

The Annual Investment Allowance gives 100% first-year relief on qualifying plant and machinery up to £1,000,000 in the period of purchase. So a £14,000 piece of equipment bought before year-end generates a £14,000 deduction this period, while the same purchase one day after year-end moves the relief into next year. Qualifying assets include computers, machinery, office furniture, and certain fixtures.

When should I start year-end tax planning?

You should start year-end tax planning in the final two to three months before your accounting period closes, not in the final days. This gives time to review your profit position, accelerate planned expenses, pay any employer pension contribution in cash before the year-end, and time capital purchases. Once the year-end passes, these opportunities close permanently because the accounting period cannot be extended retrospectively.

How Blue Tick Can Help

Blue Tick Accountants advises limited company directors on year-end tax planning throughout the 2026/27 tax year. Whether the focus is pension contributions, timing dividend payments, or accelerating allowable expenses, the right action taken before your year-end can make a material difference to your corporation tax bill. Head to our website and book a meeting now.

Conclusion

Year-end tax planning works best when it starts two to three months before the accounting period closes, not in the final days. Review your profit position now, identify which actions apply to your business, and take them before the window closes. Accelerating planned expenses, paying an employer pension contribution in cash, timing dividends around the 5 April boundary, and bringing qualifying capital purchases into the right period can each reduce what you owe, and several can be combined. Because the accounting period is fixed once it ends, the difference between acting in good time and leaving it too late is often the difference between a manageable corporation tax bill and one you could have avoided.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps limited company owners and directors across the UK plan their year-end position and reduce corporation tax. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.