If you’re a business owner, senior executive, or higher earner then the weeks leading up to 5 April are often the best opportunity to review how your income, investments, and business profits are structured from a tax perspective.
The UK tax system is complex, and many of the allowances available can't be carried forward. So, a proactive review combined with end of tax year planning can potentially help you:
Below are the main areas to check before 5 April 2026, with planning points for both individuals and businesses.
Quick links to sections covered in this blog post:
If your income is approaching or exceeding key thresholds such as £60,000, £100,000 or £125,140 or you extract profits from a business, the following areas are worth reviewing before the tax year closes.
So, before 5 April, check carefully whether any of these actions are appropriate to your circumstances:
The UK tax year runs from 6 April to 5 April of the following year. Most personal tax allowances then reset on 6 April which often (but not always) means any unused amounts are lost.
For the 2025/26 tax year, the tax-free personal allowance remains £12,570 and is frozen until 5 April 2031. The additional-rate threshold remains £125,140.
Once your adjusted net income exceeds £100,000, your personal allowance is reduced by £1 for every £2 of additional income. By the time income reaches £125,140, the allowance is lost entirely.
This can create an effective tax rate of 60% on income between £100,000 and £125,140! This is because your income is taxed at 40% while the gradual loss of the personal allowance pulls more of your income into taxation.
When tax-free childcare is factored in, this effective rate can in fact be even higher, as when an individual’s adjusted net income exceeds £100,000 (even if only by £1!), tax-free childcare and other childcare benefits are lost, meaning the effective marginal rate of income above £100,000 can for some individuals be over 100%! Careful tax planning is therefore essential when tax-free childcare is relevant.
For business owners and higher earners, this band often arises unexpectedly through bonuses, dividends, or one-off transactions.
Carefully structured pension contributions and Gift Aid donations can reduce adjusted net income and may help preserve some, or all of your personal allowance. Where income is approaching the £100,000 threshold, early review before 5 April can prevent avoidable exposure to these very penal effective tax rates.
| UK Income Tax for the tax years 2024/25 - 2027/28 |
|
| Tax band |
Tax rate (non-savings income) |
|
Personal allowance Income up to £12,570 |
0% |
|
Basic-rate Income of £12,571 - £50,270 |
20% |
|
Higher-rate £50,271 - £125,140 |
40% |
|
Additional-rate > £125,140 |
45% |
Where spouses are in business together, reviewing income allocation and profit-sharing arrangements may provide further planning opportunities. Any restructuring must be properly implemented and commercially justifiable, so professional advice should be taken before changes are made.
For the 2025/26 tax year you can receive £500 of dividends tax free. This is the dividend allowance and it can’t be carried forward, so any unused amount is lost after 5 April!
Dividends aren't subject to National Insurance and they're generally taxed at lower rates than salary. However, they must be paid from retained profits (after Corporation Tax) and don't constitute pensionable earnings.
For owner-managers, the key consideration is not simply whether to take dividends, but how dividend extraction interacts with:
Dividends, bonuses, or one-off distributions can push your total income into higher tax bands unexpectedly.
With changes to dividend tax rates taking effect from 6 April 2026 (see table below and cells highlighted in yellow specifically), reviewing the timing of your profit extraction before the tax year end may be appropriate.
An efficient extraction strategy will often involve a considered mix of salary, dividends, bonuses, and employer pension contributions (where relevant), taking into account both your personal and any business tax implications.
| Tax bands |
Dividend tax rates 2025/26 |
Dividend tax rates 2026/27 |
|
Dividend allowance Income up to £500 |
0% | 0% |
|
Basic-rate £501 - £50,270 |
8.75% | 10.75% |
|
Higher-rate £50,271 - £125,140 |
33.75% | 35.75% |
|
Additional-rate > £125,140 |
39.35% | 39.25% |
If you sell a capital asset at a profit, you currently have a £3,000 tax-free allowance. The CGT allowance can't be carried forward; it's lost if unused by 5 April. This may be a modest amount, but the exemption can be used strategically, especially if gains are accumulated in stages or your assets are jointly owned.
| Tax band |
CGT on assets |
|
Annual allowance Gains up to £3,000 |
0% |
|
Basic-rate £3,001 - £50,270 |
18% |
|
Higher-rate / Additional-rate £50,271+ |
24% |
It's worth noting that the above thresholds apply after income is taken into account. In other words, income utilises the above thresholds in the first instance, and any available threshold left is then available for capital gains.
Spouses are taxed independently for CGT purposes. But where assets are held jointly, each individual’s £3,000 exemption may be available. Of note, exemptions can't be transferred, and one spouse’s capital losses cannot be set against the other’s gains.
Where one spouse is a higher-rate taxpayer and the other has available basic-rate band, transferring assets prior to disposal may result in gains being taxed at 18% rather than 24%. Any such transfer must be properly executed and unconditional to ensure it is effective for tax purposes.
If you sell UK residential property (other than your main residence), any CGT due must generally be reported and paid within 60 days of completion. If you own more than one property, consider whether a Principal Private Residence (PPR) election is appropriate. Such an election must typically be made within 2 years of acquiring the second residence.
Where income-generating assets are held jointly, income is assumed to be split 50:50 between spouses for tax purposes unless a Form 17 declaration is submitted to reflect actual beneficial ownership.
If you're separating or divorcing, transfers between spouses can usually take place on a no gain/no loss basis. This means couples generally have up to 3 years from the end of the tax year of separation to complete transfers under these rules.
Cryptoassets, such as Bitcoin, are also usually subject to CGT. If you exchange one cryptoasset for another, convert into sterling, or use your crypto to acquire goods or services then these can all trigger a taxable disposal. As values can fluctuate significantly, maintaining accurate records is absolutely essential.
If you're considering selling a trading business, shares in a trading company, or certain business assets, BADR may significantly reduce the CGT payable.
For disposals qualifying in 2025/26, the CGT rate under BADR is 14%, compared with a 'standard' rate of 24% for higher-rate taxpayers. However, this preferential rate is scheduled to increase to 18% from 6 April 2026. For those contemplating a sale, the timing of completion could therefore materially impact on your tax outcome.
BADR is subject to a £1m lifetime limit per individual and applies only where specific ownership, shareholding, and employment conditions are met. Qualification is not automatic, and relatively minor structural issues can potentially jeopardise your access to this relief.
If an exit is being considered, be that imminent or within the next few years, reviewing your shareholdings, surplus cash levels, group structures, and eligibility conditions in advance of a transaction is essential in order to maximise any available relief.
IR may apply when you dispose of shares in qualifying unlisted trading companies, provided specific conditions are met.
For qualifying disposals in 2025/26, gains are taxed at 14%, subject to a £1m lifetime limit. As with BADR, this rate is scheduled to increase to 18% from 6 April 2026, making the timing of disposals a very relevant consideration from a tax efficiency perspective.
Unlike BADR, IR is generally aimed at external investors rather than business owners involved in the management of a business. The qualification criteria is strict, including minimum holding periods and restrictions on employment involvement.
If you hold shares in qualifying unlisted trading companies and are contemplating a disposal, reviewing eligibility and timing before 5 April may be appropriate.
Asset values, especially property and business interests, have increased over that timeframe meaning more estates are being subject to IHT. Above the nil rate band, and IHT is usually charged at 40%!
If you're married or in a civil partnership, you can usually combine allowances so your effective joint nil rate band can rise to £650,000, depending on your circumstances. An additional ‘residence nil rate band’ can apply where there's a main residence left to direct descendants. This potentially increases the combined thresholds for couples to £1m, again dependent on your circumstances.
IHT is complex and the continued freeze in thresholds means reviewing your estate exposure in increasingly important, especially for higher-net worth individuals and business owners. Certain exemptions that are available and potentially worth you exploring include:
The above exemptions may be modest however, they can form part of a longer-term strategy of reducing your estate value over time. Key questions for you to consider include:
As with other areas of tax planning, early review and structured advice are essential, particularly where significant business or property assets are involved.
If you’re purchasing residential or commercial property in England or Northern Ireland, SDLT can significantly affect the overall cost of the transaction.
The amount you pay depends on the price and your circumstances such as whether you already own property or you're buying through a company.
If you’re a first-time buyer, you won’t pay SDLT on the first £300,000 of a property worth up to £500,000. For other residential purchases, SDLT generally starts at £125,000 with higher rates applying to additional properties and corporate buyers. See the table below.
SDLT rate |
Existing home owner
|
First time buyer
|
| 0% | Up to £125,000 | Up to £300,000 |
| 2% | £125,001 - £250,000 | |
| 5% | £250,001 - £925,000 | £300,001 - £500,000 |
| 10% | £925,001 - £1.5m | |
| 12% | +£1.5m |
Before exchanging contracts, it’s worth you reviewing:
If you own a buy-to-let property (BTL) and pay higher or additional-rate tax, you can only claim mortgage interest relief at the basic rate.
This means your rental income is no longer fully reduced by the interest you pay. As a result, your taxable income may appear higher than you expect and this can potentially push you into:
If your spouse or civil partner pays tax at a lower rate, you may want to review whether beneficial ownership is structured appropriately (see the section on Form 17). A shift in income allocation can potentially materially change your overall tax position.
If you’re acquiring a new rental property, ownership structure matters from day 1. Transferring property between spouses is often possible without triggering an immediate capital gain, but SDLT can arise if debt is involved. You need to review these decisions carefully before any changes are made.
In some cases, holding rental property through a limited company can potentially be more tax-efficient.
Companies can usually deduct mortgage interest in full (subject to £2m interest restriction rules) and will pay Corporation Tax of up to 25% on profits.
However, extracting profits from the company, typically via dividends, could potentially trigger more in personal tax exposure. Moving existing properties into a company can also result in SDLT on the market value, even where CGT relief may be available in limited circumstances. You should also note that most property letting businesses do not qualify for BADR.
You also need to be aware of the Annual Tax on Enveloped Dwellings (ATED). If the value of the properties in the limited company (or partnership) exceeds £500,000 then an ATED charge may apply. This is a tax that's payable in advance every year with the amount dependent on the value of the property, see table below.
| Property value | Yearly ATED charge |
| > £500,000 up to £1m | £4,450 |
| > £1m up to £2m | £9,150 |
| > £2m up to £5m | £31,050 |
| > £5m up to £10m | £72,700 |
| > £10m up to £20m | £145,950 |
| > £20m | £292,350 |
Reliefs for ATED are available in some cases, but the reporting obligations still need to be adhered to and not overlooked.
The right structure depends on your income levels, long-term plans, and whether the property portfolio is being built for income, growth, or succession.
If you let out a room in your main residence, Rent a Room relief allows you to potentially earn up to £7,500 per year tax-free.
If your rental income stays within this limit, no Income Tax is due and you don’t need to deduct expenses. If income exceeds the threshold, normal tax rules apply. This is modest compared to other planning areas, but it can be worth checking that you’re claiming the relief correctly before 5 April, where applicable.
You can shelter savings interest from the taxman in banks, building societies, unit trusts, and trust funds, through the savings allowance. Whether this applies to you will depend on your Income Tax band, as you can see in the table below.
| Income Tax band 2025/26 |
Savings allowance |
|
Basic-rate Income of £12,570 - £50,270 |
£1,000 |
|
Higher-rate £50,271 - £125,140 |
£500 |
|
Additional-rate > £125,140 |
£0 |
You can also invest up to £20,000 into an Individual Savings Account (ISA) in the 2025/26 tax year. If you don’t use the allowance by 5 April however, it’s lost!
For higher earners and business owners building surplus cash, ISAs remain a legitimate, simple, and effective means to shelter investment income and capital gains from the taxman.
If you and your spouse both use your allowances, you can protect up to £40,000 this tax year. Income and gains generated within an ISA are tax-free, which becomes increasingly valuable when you consider that dividend and capital gains tax-free allowances have reduced in recent years.
| Type of ISA | Annual limit for 2025/26 |
| Cash ISA | £20,000 |
| Stocks and shares ISA | £20,000 |
| Flexible ISA | £20,000 |
| Innovative finance ISA | £20,000 |
| Lifetime ISA | £4,000 |
| Junior ISA | £9,000 |
There are different types of ISA available depending on your objectives, and the right choice will depend on your wider financial position — particularly if you are also maximising pension contributions.
Before investing, it’s sensible to ensure your ISA strategy aligns with your broader tax and retirement planning.
There’s no limit to how much you can hold in a pension overall. However, there is an annual allowance for pension contributions that restricts how much you can invest in each tax year and then receive tax relief.
For 2025/26, the annual allowance is £60,000, or 100% of your relevant earnings, whichever is lower.
If your income is higher, the position becomes more complex!
Where your adjusted income (income that includes all pension contributions) exceeds £240,000 and your threshold income (total taxable income excluding pension contributions) exceeds £200,000, your annual allowance may be tapered. This reduces your £60,000 allowance by £1 for every £2 of adjusted income above £240,000.
This means for directors and business owners extracting profits, it can potentially arise unexpectedly where your salary, dividends and employer pension contributions combine to end up pushing your total income into taper territory.
Make use of carry forward before 5 April?
You may be able to make use of unused pension allowances from the 3 previous tax years under what's known as the carry forward rules. These apply so long as you were a member of a registered pension scheme during those years.
So, for the 2025/26 tax year, unused allowances can potentially be applied from:
Breaching the rules by exceeding your available annual allowance, results in a tax charge at your marginal rate. So, accurate calculations are absolutely essential before you make any large contributions!
Pensions and Inheritance Tax
From April 2027, inherited private pensions are set to fall within the scope of Inheritance Tax.
If you're a high net worth individual, this may alter your prior potential view of pensions given they used to be fully outside of an estate and were therefore a valuable inheritance tax planning tool. Contribution strategy, withdrawal timing, and wider estate planning should therefore be reviewed together as a mix rather than in isolation.
Accessing your pension
You can currently access your pension from the age of 55 but this rises to 57 from 6 April 2028.
Any withdrawals are subject to Income Tax except for the tax-free lump sum allowance. This means making withdrawals could push you into higher tax bands. For business owners in particular, pension withdrawals should be considered alongside dividend and salary planning. This is with the aim of avoiding unnecessary exposure to higher marginal rates.
Certain specialist investments can offer generous tax reliefs but these can come with significantly higher risk and potential complexity. They are typically only suitable if you’re comfortable putting capital at risk and can afford to lose part, or even all, of the investment.
Enterprise Investment Scheme (EIS)
If you invest in shares that qualify under EIS, you may be the able to reduce your Income Tax liability by up to 30% of the amount invested, either in the current tax year or the previous one via something called the carry back.
You can also defer any CGT liability by reinvesting gains into qualifying EIS shares. The deferred gain then becomes taxable later when the EIS investment is disposed of.
The annual EIS investment limit is £1m, rising to £2m where at least £1m is invested in knowledge-intensive companies. If the shares are held for at least 3 years, any gain is usually exempt from CGT. If the investment is sold at a loss, that loss can often be set against income.
Given HMRC scrutiny in this area, advanced assurance from HMRC and careful due diligence are essential prior to committing to any investment.
Seed Enterprise Investment Scheme (SEIS)
SEIS provides Income Tax relief of up to 50% of the amount you invest, and again this is with carry back available. The annual SEIS investment limit is £200,000. As with EIS, gains may be CGT-free if qualifying conditions are met and the shares are held for the required period. Just remember that these are early-stage businesses and carry a high risk of failure.
Venture Capital Trusts (VCTs)
Investment in VCTs offers:
However, unlike EIS, gains from any other assets can't be rolled into VCT investments to help defer CGT.
Community Investment Tax Relief (CITR)
CITR encourages individuals and businesses to invest in accredited Community Development Finance Institutions (CDFIs). This is to support organisations in disadvantaged UK communities. It can provide you potentially with tax relief of 5% per year for 5 years, giving total relief of 25%, provided conditions are met and the investment is held for at least 5 years.
Other asset classes
There are other asset classes that can be exempt from CGT on disposal, classic cars being an example. Be warned though, losses on these assets can't be offset against other gains.
If you or your partner receive Child Benefit and either of you has adjusted net income (income minus specific deductions, such as pension contributions and Gift Aid) above £60,000, the HICBC applies.
The charge withdraws Child Benefit at a rate of 1% for every £200 of income between £60,000 and £80,000. Once income reaches £80,000, the benefit is fully clawed back. For higher earners, this charge often arises where dividends, bonuses, or other variable income push total income beyond the £60,000 threshold.
Where exposure exists, careful planning including the use of pension contributions, Gift Aid, or reviewing income allocation between spouses may help reduce your adjusted net income and mitigate the charge.
If your income exceeds £60,000 and Child Benefit is received, HMRC must be notified and a tax return completed so the charge can be assessed correctly. If both partners exceed the threshold, responsibility falls on the higher earner.
The tax-free childcare scheme can provide up to £2,000 per child per year (£4,000 for disabled children) towards eligible childcare costs.
However, eligibility is lost if either partner’s adjusted net income exceeds £100,000.
For business owners and higher earners, this threshold can be breached unexpectedly where you receive bonuses, dividends, or one-off transactions that increase your total income.
As with the personal allowance taper, pension contributions and Gift Aid payments can reduce your adjusted net income and may help preserve eligibility where income is close to the £100,000 limit.
If your income is approaching this threshold, reviewing projections before 5 April can prevent you losing the relief for the following year.
If you’re married or in a civil partnership, and one spouse has income below the £12,570 personal allowance while the other is a basic-rate taxpayer, you may be eligible for Marriage Allowance.
This allows £1,260 of the unused personal allowance to be transferred, generating a tax saving of up to £252 per year. Claims can usually be backdated for up to four tax years.
While the saving is quite modest compared to other planning opportunities, it remains worth checking eligibility before 5 April. How much you save depends on your income, so use the government’s marriage allowance calculator to check your benefit.
If you run a family business or a farm, you may have been planning to pass these down to the next generation by making use of either BPR, or APR.
BPR is a tax break that works by enabling certain qualifying business assets to be passed on (potentially during your lifetime or upon death) at a reduced Inheritance Tax charge. If you and your business meet the conditions then 100% relief from IHT is available until 5 April.
After that date, from the start of the 2026/27 tax year, 100% relief applies only up to a £2.5m threshold. A 50% relief then applies above that level that results in an effective rate of tax of 20%. This means it could be very tax advantageous to enable a transfer before the end of the 2025/26 tax year!
From 6 April, for any IHT due there is a 10-year window in which it can be paid through 10 equal annual instalments. The instalments are also interest-free so long as they're paid on time.
APR functions in a similar way, offering relief of 50% or 100% against the agricultural value of the property in question. Again, there is legislation that has to be adhered to as to ownership and nature of the property. As with BPR, a new £2.5m threshold comes into place from 6 April so be sure to consult a tax advisor when pursuing any transfer or sale.
The main rate of Corporation Tax is 25% if your company's taxable profits are greater than £250,000. If your taxable profits are £50,000 or less then the small profits rate of 19% applies.
If your profits fall between £51,000 and £250,000 then a tapered rate, or marginal relief, is applied. This means the tax rate increases from 19% to 25% depending on the amount of taxable profit. It's worth noting that the effective rate of corporation tax on profits between £51,000 and £250,000 is 26.5%.
You can find out more about this, and how much marginal relief you're entitled to by using HMRC's marginal relief for Corporation Tax calculator. If your profits sit within this band then timing your income and expenditure before 5 April could impact on the rate and therefore amount of tax your company pays.
You should also be aware that these thresholds are shared between associated companies. So, if you operate multiple companies under a common control, the £50,000 and £250,000 limits may be divided between them and that potentially brings more profits into the 25% band than perhaps anticipated.
Before your year end, it’s worth reviewing:
If your company prepares deferred tax calculations, the applicable Corporation Tax rate will need to be factored into your year-end accounts.
If your company invests in innovation through developing new products, improving processes, or solving technical uncertainties, then you may qualify for R&D tax relief.
Depending on the circumstances of your business this could result in either:
Under the current rules, SMEs that meet the R&D 'intensity threshold' (broadly 30% of total expenditure spent on qualifying R&D) may access enhanced relief. Where this threshold is not met, companies may instead claim under the merged R&D scheme, which provides a 20% expenditure credit on qualifying costs (that are subject to Corporation Tax).
The regime has changed in recent years and HMRC scrutiny has increased significantly. Claims need to be well-documented, and supported by clear technical evidence to demonstrate that the projects being claimed for meet the strict requirements for the relief.
If your business is investing heavily in projects including technology, engineering, manufacturing, or software to name a few, then reviewing eligibility before your year end can help ensure you maximise relief while remaining compliant.
Poorly prepared or speculative claims can result in enquiries, fines and penalties, and cash flow disruption! This is an area where we would recommend that careful review, planning, and advice is absolutely essential.
If your business is planning to invest in equipment, machinery, or certain building features, the timing of that expenditure could significantly impact on your Corporation Tax bill.
The AIA allows you to deduct up to £1m of qualifying capital expenditure from your taxable profits in the year you incur the cost. This allowance applies to most businesses such as limited companies, sole traders and partnerships that invest in plant and machinery. Qualifying assets can include:
If your planned investment is already budgeted for, bringing expenditure forward before your year end may may reduce your overall tax liability. This could be particularly useful if you're close to the £250,000 main rate threshold.
Full expensing
If your company is subject to Corporation Tax, full expensing can be applied to any qualifying expenditure that exceeds the £1m AIA limit.
This allows 100% of qualifying plant and machinery expenditure for main pool items, or 50% of special rate items, to be deducted from taxable profits, again in the year of purchase and that can provide immediate tax relief as opposed to spreading it over several years.
If you have a growing business and you're reinvesting profits, this can improve short-term cash flow and reduce exposure to higher rates of Corporation Tax. The key is that the commercial reasons for the purchase must lead the investment decision making. Where relevant purchases are planned, make sure you review the timing and do so prior to 5 April, if possible, as this could help optimise the tax outcome.
If you control your own company, you can also control the timing and method of income extraction, and that in turn creates planning opportunities.
If you have a particularly strong year, then you may consider deferring income into the next accounting period (if commercially appropriate). Doing this by delaying invoicing or completion dates can sometimes help reduce your exposure to higher tax bands.
Equally, if profits are already high, accelerating expenditure or bonuses before year end may help manage your overall tax position.
Retaining profits in your business
If you don’t need to withdraw funds personally, retaining profits in your company can also be tax-efficient option. This is because Corporation Tax rates are generally less than the higher and additional rates of Income Tax.
Retained profits can then be considered for reinvestment into areas such as:
Be warned though, if excess cash and non-trading assets begin to represent more than 20% of your company’s overall value, this can jeopardise your access to BADR on a future sale. It may also affect BPR for Inheritance Tax purposes.
This is especially important if you are building the business with an eventual exit in mind.
Salary, dividends, bonuses, and pension contributions
Historic advice such as 'take a small salary and the rest as dividends' is no longer always optimal. An efficient extraction strategy has to take consideration of a number of things such as:
Salary and employer NICs are deductible for Corporation Tax purposes. Bonuses can also reduce company profits and that can potentially bring taxable profits below key thresholds.
Employer pension contributions can be particularly efficient as the company receives Corporation Tax relief and avoids employer NICs, while you receive pension funding without immediate Income Tax or NIC exposure (subject to annual allowance limits).
The right mix depends on your wider income, future plans, and whether you are building capital for reinvestment, or exit. A review before 5 April can ensure extraction is structured intentionally rather than in a reactive manner.
If as your business scales, you may accumulate surplus cash. It can be tempting to invest those funds through your company in things such as land, property, and other assets. These investments could generate a decent return over time albeit they're not likely to be for a trading purpose.
The mix of trading and non-trading activity within your company matters more than many business owners realise. If you have non-trading assets such as property or large cash balances that aren't required for working capital and that represent 20% or more of your company's overall value then HMRC could regard this as significant.
This can have serious potential consequences, as you may lose access to:
Keep in mind that if your company is deemed as a close investment holding company, it will not qualify for the small profits’ Corporation Tax rate of 19%, and will then always be subject to the main rate of 25%!
For founders building towards an eventual exit, or those using share incentives to attract key staff, this is an area that should be reviewed carefully before any surplus funds are allocated for investment.
A short conversation before making investments through the company can prevent long-term structural problems down the line!
Consider the below carefully, have you incurred:
If so, the way those losses are used could materially affect your tax position and cash flow. Depending on your circumstances, losses can often be:
In some cases, carrying losses back can generate a Corporation Tax refund and that may provide a welcome cash injection.
The right approach will depend on your current profitability, expected future results, and cash flow requirements. Using losses immediately is not always the optimal option, especially if profits are expected to increase in future years.
Before finalising your year-end position, it’s worth reviewing whether losses are being used in the most commercially sensible manner. What you choose to do in relation to claiming loss relief is likely to depend on the potential tax relief available, and how it impacts on your cash flow.
With this in mind it's wise to obtain professional advice specific to your business circumstances!
If your company provides cars to you or your employees, the CO₂ emissions of those vehicles directly affect the Benefit in Kind (BIK) charge. Higher-emission vehicles result in a higher taxable benefit meaning higher Income Tax for the driver and higher Class 1A NI for the company.
Electric vehicles however, attract significantly lower BIK rates. For directors and higher earners, this can materially reduce the personal tax cost of having a company car. From a Corporation Tax perspective, companies can currently claim:
If you reimburse employees for charging a company-owned electric vehicle at home, this is often not treated as a taxable benefit. Where vehicles are due to be replaced, reviewing the tax impact before committing to a new lease, or purchase, can help you reduce both personal and corporate tax exposure.
Are you intending to purchase commercial property?
Many commercial properties include fixtures and integral features that may qualify for capital allowances. This can include items such as electrical systems, heating, air conditioning, lighting, and certain fittings.
However, it's important that you understand that allowances aren't automatic. When you acquire the property, the value attributed to qualifying fixtures must typically be agreed between you, as the buyer, and seller through a formal election. If this step is missed, relief can potentially be lost permanently.
If you’re purchasing commercial premises, either to trade from or as an investment, it's absolutely essential that you review the capital allowances position before completion.
The SBA provides tax relief on:
Relief is given over time rather than upfront, but for large projects the cumulative benefit can be significant.
If you’re undertaking substantial building works or acquiring newly developed commercial property, ensuring SBA is identified and properly recorded from the outset will protect future relief. As with many areas of property taxation, seeking advice early, preferably before contracts are finalised, can potentially have a significant impact on the long-term tax outcome.
The EA legislation means that if you're an eligible employer then you can reduce your annual Employer's National Insurance Liability by up to £10,500! To qualify you must:
Of note, if you're business has several directors and they earn over the secondary threshold for NI then this can be potentially eligible and it's worth exploring. However, EA isn't available to you if you're a single director company where you as the director are also the only employee paid above the secondary threshold.
EA isn't automatic, it has to be claimed every year usually through payroll software. If your business employs staff and hasn’t reviewed its eligibility recently, it’s worth checking before year end to ensure the allowance is being utilised correctly.
If you're growing your team of people, taking on apprentices can offer commercial and tax advantages!
There's generally no Employer's NICs applicable to the pay of an apprentice under the age of 25 provided their earnings are at, or below, the Upper Secondary Threshold (≤£125 per week in 2025/26).
Similarly, if you employ staff under the age of 21 then Employer's NIC isn't usually payable on their earnings up to the relevant threshold.
If your annual payroll bill is less than £3m then the Apprenticeship Levy doesn't apply. Instead, you may be eligible for Government co-investment funding towards the cost of apprenticeship training. In many cases this can cover:
To access this funding you'll need to register through the Apprenticeship Service to reserve training places in advance. You can find out more about apprenticeship funding here.
If you're planning to recruit in this tax year, be sure to review apprenticeship funding before making any offers. It can help both reduce employments costs whilst also supporting you in developing your in-house talent.
If you've provided your staff with cash, gifts, and/or benefits that aren't included in their normal salary such as vouchers, hampers, or small perks then you need to check they fall within the trivial benefits rules.
To qualify as a trivial benefit, the cost must generally:
If the conditions are met, no Income Tax or National Insurance is due. Where you're in excess of these limits there could be a tax liability. For tax efficient gifts to staff you need to refer to Benefit-In-Kind (BIK) rules.
Staff entertainment and annual events
If you’ve hosted events such as Summer or Christmas parties, the annual function exemption allows up to £150 tax-free per employee per tax year, and this includes VAT. The £150 is a limit not an allowance . If the cost per head exceeds this amount, then the entire amount can be taxable.
Where you're in excess of the limit, you may be able to settle the tax and NIC due, on behalf of employees, through a PAYE Settlement Agreement (PSA). This then prevents an unexpected tax bill for staff.
Before the tax year end, it’s worth reviewing what you've provided to ensure reporting obligations are accurate.
Finally, remember that the P60 forms, that summarise your employees’ salaries and deductions for the prior tax year, must be issued to staff by 31 May. They have to be distributed to everyone that worked for you on 5 April.
The P60 summarises each employee’s total pay and deductions for the tax year and must be provided by 31 May.
Failing to issue P60s on time can lead to unnecessary compliance issues, so it’s worth ensuring your payroll records are finalised promptly after the year end.
The content of this post was created on 07/03/2022 and updated on 06/03/2026.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.
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