Actions to take ahead of the tax year end

Tax year end planning is rarely about one clever idea. It is about getting the basics right in time: how you extract profit, what your records show, and whether upcoming changes affect your next step.

Start with the main question: how do we want to take profit out?Most owner managers have the same question at year end: how much can I take out, and in what form. The right answer depends on profit, cash, personal income levels, and what you are trying to achieve over the next 12 months, for example growth, funding, or a sale.

• Check current year-to-date profit and forecast profits to 31st March or 5th April.
• Review your personal income position so dividends do not push you into a higher band unexpectedly.
• Hold enough cash back for VAT, PAYE and corporation tax to avoid funding tax with overdraft.

Dividend planning: know the change from 6th April 2026Dividend tax rates are due to increase by 2 percentage points for Basic and Higher rate tax payers from 6th April 2026.

For many directors, this makes timing and planning more important, especially where dividends are a regular part of extraction.

• Ordinary dividend rate: 10.75% from 6th April 2026.
• Upper dividend rate: 35.75% from 6th April 2026.
• Additional dividend rate remains 39.35%.

Director loan accounts: clean up issues before they become expensiveAn overdrawn director loan account at year end can trigger a corporation tax charge on the company and a benefit in kind on the director.

Even where you plan to clear it later, the timing and the paperwork matter.

• Review the balance now and agree a plan, for example repayment, dividend declaration, or salary adjustment.
• Avoid repay and re borrow patterns that can be caught by anti avoidance rules.
• Consider whether the loan creates a taxable benefit where interest is not charged at the official rate.

Pensions and allowances: check the basicsEmployer pension contributions can be tax efficient, but they must be affordable and properly documented.

Review contribution levels against forecasts, and ensure payments clear before the relevant deadline where timing matters.

• Confirm the company has the cash to fund contributions without creating pressure on working capital.
• Check personal annual allowance position where relevant.
• Document the decision in board minutes where needed.

Benefits and expenses: spring clean now, not in JulyA quick review of benefits and expenses can prevent messy P11D work later.

The P11D deadline is 6th July each year for reporting benefits, so good records now reduce future admin.

• Confirm which expenses are business and supported by records.
• Check company cars, fuel, and any personal use assets.
• Decide whether payrolling benefits is appropriate for next year.

Key changes to be aware of from April 2026Some changes are tax technical, others affect payroll cost and compliance. If you know what is coming, you can plan without drama. Not every change affects every director, but it helps to have the headline list.

Data sources: 
https://www.gov.uk/government/publications/changes-to-tax-rates-for-property-savings-dividend-income/changes-to-tax-rates-for-property-savings-dividend-income
https://www.gov.uk/government/publications/minimum-wage-rates-for-2026

A simple year end action listIf you want a quick reset, use this as a prompt for a short meeting with your adviser. The goal is clarity and a plan, not paperwork for its own sake.

• Forecast profits and cash to the start of the new tax year.
• Agree extraction plan for the next 3 to 6 months.
• Review director loan accounts and benefits.
• Confirm tax reserves and filing deadlines.
• List any major changes planned in the next 12 months, such as sale, restructure or investment.

How can Oldfield help you?

If you want proactive support with clearer numbers and fewer surprises, speak to us about a review meeting and next steps.

Frequently Asked Questions

Q: When should directors start tax year end planning?
A: Ideally in February or earlier. You want time to review profit, cash, and options without rushing decisions.

Q: Can I declare dividends if cash is tight?
A: Dividends must be supported by distributable reserves, and you should also consider cashflow. A dividend that creates cash pressure can cause bigger problems than it solves.

Q: Do dividend tax rates change in April 2026?
A: Dividend income tax rates are due to rise by 2 percentage points from 6th April 2026, so planning and timing may matter more for regular dividend extractors.

Q: What is the biggest director loan risk at year end?
A: Having an overdrawn balance at the company year end can trigger a company tax charge and personal benefit in kind issues. Timing and documentation are key.

Q: What is BADR and why does it matter?
A: Business Asset Disposal Relief can reduce the capital gains tax rate on qualifying disposals. The rate is scheduled to increase to 18% from 6th April 2026.

Remember, if this is something you are concerned about, Oldfield are happy to guide you through the process.

Please note: This article is for general information purposes only and was correct as at the time of writing (09/02/26) and does not constitute financial advice. Tax rules and legislation are subject to change, and their application depends on your individual circumstances. We recommend seeking advice from a suitably qualified tax adviser. No responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.