End of Year Tax Planning: A Guide for UK Company Directors
- Feb 24, 2025
- 3 min read
Updated: 9 hours ago
As we approach the end of the UK tax year on 5 April 2026, now is the ideal time for company directors to review their personal income position and ensure they are extracting profits from their company in the most tax-efficient way.
This guide focuses specifically on personal tax planning before 5 April. (Company financial year-end planning may fall on a different date and should be reviewed separately.)
What’s Changed for 2025/26?
Before looking at planning opportunities, it’s helpful to understand the current landscape:
The Personal Allowance remains frozen at £12,570
The Dividend Allowance remains at £500
Dividend tax rates remain at:
8.75% (basic rate band)
33.75% (higher rate band)
39.35% (additional rate band)
The Pension Annual Allowance is £60,000
The Annual Allowance begins to taper where adjusted income exceeds £260,000 (with a minimum tapered allowance of £10,000)
With income tax thresholds frozen, more directors are being pushed into higher-rate tax bands, making proactive planning increasingly important
Review Your Salary and Dividend Strategy
Most company directors take a combination of salary and dividends. Before 5 April, it’s important to review whether your current mix remains tax-efficient.
You should consider:
Have you fully used your personal allowance?
Have you utilised your £500 dividend allowance?
Are you close to entering the higher-rate or additional-rate tax bands?
Will additional dividends push you over £100,000, triggering a reduction in your personal allowance?
Careful planning around tax bands can help minimise unnecessary higher-rate exposure.
Timing is critical as dividends must be properly declared and documented before 5 April to fall within the 2025/26 tax year.
Pension Contributions
Pension contributions remain one of the most tax-efficient ways for directors to extract value from their company.
For 2025/26:
The standard Annual Allowance is £60,000
The allowance begins to taper once adjusted income exceeds £260,000
Unused allowances from the previous three tax years may be available for carry forward
Company pension contributions:
Reduce corporation tax
Are not subject to National Insurance
Do not create personal income tax at the point of contribution
If you are considering making a contribution this year, it must be paid before 5 April to count towards the 2025/26 tax year.
Planning for Dividend Tax
Unlike salary, dividend tax is not deducted at source. This means directors can receive dividends without immediately paying the associated personal tax.
However, dividend tax will be due through your Self Assessment return and is typically payable by 31 January following the end of the tax year.
It is important to:
Estimate your total dividend income for the year
Understand which tax band it falls into
Set aside sufficient funds to cover the future tax liability
Failing to plan for this can create cash flow pressure in January.
Key Personal Tax Considerations Before 5 April
Before the tax year ends, directors should:
✔ Review total personal income for the year
✔ Confirm whether additional dividends should be declared
✔ Check exposure to higher-rate or additional-rate tax
✔ Consider pension contributions before the deadline
✔ Estimate dividend tax due in January and set funds aside
These actions focus specifically on personal tax planning aligned to the UK tax year end.
How Lava Sky Accounting Can Help
Every director’s situation is different. The right approach will depend on your company’s profitability, your wider income position, and your long-term plans.
At Lava Sky Accounting, we regularly review our director clients’ income structures to ensure they remain tax-efficient and aligned with their goals.
If you would like us to review your position before 5 April and confirm whether any action is needed, please get in touch and we can arrange a short discussion.
Planning ahead, even with small adjustments, can make a meaningful difference to your overall tax position.
