As your company’s financial year-end approaches, it’s a good opportunity to review your finances and make sure you aren’t overlooking legitimate opportunities to reduce your Corporation Tax bill.
Tax planning shouldn’t mean rushing to spend money simply to save tax. But if there are costs you’ve already incurred, investments the business genuinely needs, or allowances available to you, reviewing these before year-end could make a difference to your final tax position.
Here are some of the areas worth discussing with your accountant before your company’s year-end arrives.
1. Check You’ve Claimed All Allowable Business Expenses
Let’s start with something simple.
Have all of the expenses your business has incurred actually made it into your accounts?
Allowable business expenses can reduce the profit on which your company pays Corporation Tax, so missing legitimate costs could mean paying more tax than necessary.
Timing can also make a difference when you’re approaching your company’s year-end. It’s not enough to simply plan to make a purchase or intend to incur a cost before the year closes. The transaction needs to meet the relevant accounting and tax rules to fall within that accounting period.
For example, if you’re purchasing equipment and hoping to claim capital allowances in the current accounting period, the timing of when the expenditure is treated as incurred matters. Simply placing an order before year-end may not be enough.
Similarly, don’t assume that paying a bill early automatically brings the entire expense into the current accounting period. For many costs, the accounting treatment depends on when the goods or services relate to, rather than simply when the money leaves your bank account.
It might sound like a small distinction, but getting the timing wrong could mean a deduction or allowance falls into a different accounting period than you expected.
Depending on your business, allowable costs could include:
- Professional fees
- Business insurance
- Software and subscriptions
- Marketing and advertising
- Bank and payment processing charges
- Business travel
- Training related to your existing business activities
- Office and administrative costs
The rules around what can and cannot be claimed vary, so don’t assume every business purchase automatically qualifies.
Keeping your bookkeeping accurate and up to date throughout the year makes this review much easier. If you’re considering a significant purchase close to your year-end, it’s worth speaking to your accountant first so you understand how and when the tax relief could apply.
2. Review Any Equipment or Machinery Your Business Needs
Planning to invest in equipment, machinery, computers, or other assets? Before your year-end, it may be worth discussing the timing of those purchases with your accountant.
The Annual Investment Allowance (AIA) allows businesses to deduct the full value of most qualifying plant and machinery from profits before tax, subject to the applicable rules and allowance. Other capital allowances may also be available depending on what you’re purchasing and your circumstances.
This doesn’t mean buying equipment purely for the tax saving. But if the business genuinely needs the investment, understanding the tax treatment before making the purchase can help you plan it more effectively.
3. Consider Company Pension Contributions
For limited company directors, pension contributions can form part of wider remuneration and tax planning.
Employer pension contributions made by a company can potentially qualify as an allowable business expense for Corporation Tax purposes, provided you have not used your full allowance, and the relevant conditions are met. That can make pensions an attractive way to lower both Corporation Tax and build your long-term pot at the same time.
However, pension allowances and tax rules can become complicated quickly, particularly if you’ve made significant contributions previously or have other pension arrangements. Before making a large contribution, we recommend speaking to your accountant and, where appropriate, a regulated financial adviser.
4. Look Ahead at Planned Business Spending
Your year-end is also a useful point to review what’s coming next.
Perhaps you already know the business will need new equipment, professional support, repairs, software, or another significant investment in the coming months. Before deciding whether to bring that spending forward, consider the bigger picture:
- Does the business genuinely need it?
- When does it make commercial sense to make the purchase?
- What will the cash flow impact be?
- How will the expenditure be treated for tax?
- Could any tax relief or capital allowances apply?
Tax should be part of the decision, not the only reason for making it.
If you’ve considered these points and the expenditure already makes commercial sense, bringing a planned purchase forward could sometimes allow the relevant deduction or capital allowance to fall into the current accounting period rather than the next one. This could reduce your taxable profits and, as a result, your Corporation Tax liability for that period.
For example, if you’re planning to invest in qualifying equipment shortly after your year-end anyway, making the purchase before year-end could potentially mean receiving the available tax relief sooner. Depending on the expenditure, waiting until the new accounting period could mean waiting another year before that cost affects your Corporation Tax position.
However, the timing and tax treatment will depend on the type of expenditure and your individual circumstances. Bringing a cost forward also means cash leaves the business sooner, so any potential tax saving needs to be considered alongside your cash flow.
The key is not to spend money simply to reduce your tax bill. Instead, if the business already needs to make the investment, consider whether the timing of that spending could also work in your favour from a tax-planning perspective.
5. Look for Expenses That Could Have Been Missed
Even with good bookkeeping, smaller expenses can occasionally slip through the cracks. Before finalising your year-end figures, review whether you’ve correctly recorded relevant costs such as:
- Business mileage and travel
- Working-from-home
- Professional subscriptions
- Insurance
- Bank charges and payment processor fees
- Marketing and advertising
- Software and digital tools
- Training and professional development
Remember, an expense needs to meet the relevant rules to qualify for tax relief.
This is money already spent, so you may as well make sure it counts! But remember, an expense needs to meet the relevant rules to qualify for tax relief so if you’re unsure, check first, rather than automatically claiming it.
Don’t Leave Tax Planning Until After Year-End
One of the biggest advantages of reviewing your position before your accounting year-end is that you still have time to act. Once the year has finished, some planning opportunities may no longer be available for that accounting period.
A pre-year-end review can help you understand your expected profit, likely Corporation Tax liability, cash position, upcoming investments, and any legitimate tax planning opportunities available to the business. More importantly, it means your decisions can be based on the numbers rather than a last-minute rush.
Need Help With Year-End Tax Planning?
If your company’s year-end is approaching, now is a good time to review your financial position and understand what actions, if any, could be worth taking.
At BW Business Accountants & Advisers, we help limited companies review their finances, plan for upcoming tax liabilities, identify relevant tax planning opportunities, and make informed decisions before year-end. With proactive tax planning, you can understand what’s coming and make use of the allowances and reliefs available to your business without spending simply for the sake of saving tax.
See what services and packages we provide here and contact us today to start the conversation.
Are you unsure about changing accountants or need help knowing when it’s time to switch? Dive into 5 Signs It’s Time to Change Your Accountant.
Disclaimer: The information mentioned in this blog was correct at the time of posting (October 2026) and has not been updated for any future changes in tax law or HMRC practice. The contents of this blog has been produced as a helpful reference point, and the information provided should be used as a guide only. You should discuss your specific circumstances directly with us before taking any action based on the information included in this blog.