Tax planning before 5th April 2026

As we approach the end of the tax year, now is the time to review your numbers to make sure you’re not paying more tax than necessary. 

 

A few proactive steps taken now can make a significant difference to your overall tax bill. Here are a few areas worth considering if you are looking to save tax: 

 

 

If your business needs new equipment, machinery, tools, or technology, bringing that purchase forward before the end of the tax year end could reduce your taxable profits, thereby saving you some corporation tax. 

 

Examples of qualifying purchases may include: 

 

 

If the purchase is commercially sensible and affordable, accelerating it before 5 April can reduce this year’s corporation tax bill. 

 

Important note: The asset must be in use before the year-end to qualify and you should only buy it if it makes sense commercially i.e. not just to save tax. If it doesn’t make sense and you don’t really need it, it’s better to keep hold of the cash. 

 

 

Pension contributions remain one of the most tax-efficient ways to extract profit from your company. Not only that, they are an alternative way to pay yourself if you don’t want or need to take more in the way of salary or dividends. 

 

- Employer pension contributions are usually deductible for corporation tax 

- There is no National Insurance to pay 

 

- Personal contributions may extend your basic rate tax band 

- Higher rate relief may be available, depending on your circumstances 

 

If you’ve had a strong year and expect profits to be high, increasing your pension contributions before 5 April can reduce your personal and/or corporation tax bill. 

 

Remember though, these contributions must be real cash transactions paid into the pension scheme, so it’s important to check you leave sufficient cash in the business to trade as normal. 

 

Top tip: Always check annual allowance limits and carry forward rules before making large contributions. It is recommended that you take independent financial advice before making any pension contributions. 

 

 

The Chancellor announced a rate change in the November 2025 budget, increasing the tax rate bands for dividends from 6th April 2026. This means that dividends declared from 6th April will be taxed at 10.75% (basic rate, previously 8.75%) and 35.75% (higher rate, previously 33.75%). Therefore if you are thinking of declaring dividends it might be useful to declare these before 5th April this year (or 31st March if you are doing it as part of your year end accounts).  

 

Points to consider before declaring a dividend: 

- You must have sufficient distributable reserves (this is profit after paying corporation tax) 

- Dividends must be properly documented 

- Dividends declared will be taxed on your self assessment tax return 

 

If you’d like us to review your projected profits and calculate your likely tax liability to assess whether pension contributions or dividends are sensible please get in touch and we will book in a tax planning session. 

 

 

Along with the dividend tax rate increase the Chancellor confirmed that savings tax rates will also rise by 2%. This means that interest generated from money held in savings previously taxed at 20%/40% will now be taxed at 22% for basic rate savers and 42% for higher rate savers (47% for additional rate payers). 

 

If you think you will earn savings interest over and above your tax free allowance of £1,000 for basic rate payers or £500 for higher rate tax payers then consider making use of ISA’s where you haven’t already. We recommend speaking to an independent financial advisor on how to make the most of your money and invest appropriately. 

 

Get in touch with one of the team if you have any queries about potential tax savings at any point, but especially before 5th April, and we will help you plan how best to make some savings.