Limited Company Tax Planning Checklist for 2026/27

Take £100 of profit inside a company that pays the 19% small profits rate. Draw it out as a dividend as a higher-rate taxpayer, and roughly £52 reaches your pocket. The rest goes to HMRC in two instalments, corporation tax first, dividend tax second. Now take the same £100 and pay it into your pension as an employer contribution. All £100 goes in.

That gap is why I'm so keen on planning early. Almost every saving in this checklist comes from a decision made weeks or months before a deadline, not from a frantic phone call in the final week. And as I write this, we're roughly six months from the end of the 2026/27 tax year. That's plenty of time to do things properly.

I've built this checklist around the three moments when planning matters most: before your company's year end, before you take a dividend, and before 5 April 2027. Each section is a set of practical checks, with the reasoning behind each one and a link to our detailed guide where you want more depth. You won't need every item. But I'd be surprised if you read all the way through and found nothing that applies to you.

Before the Company Year End

Your company's year end is the point at which its profit for the year is fixed. Anything you want to influence has to happen before it, not after. So this is where the biggest savings sit.

Check Where Your Profit Is Heading

Start with the number that drives everything else: your expected taxable profit for the year. Not the figure on last month's management accounts, but a realistic estimate of where you'll finish.

The reason it matters is the marginal relief band. Between £50,000 and £250,000 of profit, every extra pound is effectively taxed at 26.5%, higher than the 25% main rate itself. If you're inside that band, or close to it, then reducing profit by even a few thousand pounds is worth more than it looks. Our guide to corporation tax and marginal relief walks through the calculation with worked examples.

Ask yourself:

• What is my likely taxable profit for this year?
• Am I near £50,000 or £250,000, where a small change moves the rate?
• Do I own or control another company? If so, the thresholds are divided between associated companies, and your position may be very different from what you assumed.

I once worked with a director who had set up a second company years earlier for a side project and forgotten about it. It was dormant, but still associated, and it halved the thresholds for his main trading company. He'd been planning around a £50,000 limit he didn't actually have. Finding that out in September was annoying. Finding it out after the year end would have been expensive.

Bring Forward or Time Capital Spending

If you're planning to buy equipment, machinery, or a vehicle, the timing relative to your year end changes which accounting period gets the tax relief.

Most qualifying equipment is relieved in full through the Annual Investment Allowance, up to £1 million a year. Full expensing and the new 40% first-year allowance sit behind it for larger spending. Cars are treated separately, and the difference between electric and petrol is enormous. A new, unused, fully electric car qualifies for a 100% first-year allowance, and that relief is currently confirmed to run until 31 March 2027 for corporation tax. If an electric company car is on your list, that date is worth building your plans around.

Also remember the main pool writing-down allowance dropped to 14% from April 2026, so anything relieved slowly is now relieved more slowly. And you can read more about capital allowances in our guide.

Checklist:

• List any planned equipment, vehicle or technology purchases
• Decide whether they fall before or after the year end, and whether moving them changes the tax relief
• Check whether a planned car qualifies for the 100% first-year allowance
• Keep invoices, dates of purchase and delivery evidence

A note of caution: don't buy something you don't need just to save tax. Spending £10,000 to save £2,500 of tax leaves you £7,500 worse off. Bring forward purchases you were going to make anyway.

Consider an Employer Pension Contribution

This is the single most underused relief I see. An employer pension contribution is deductible against corporation tax, avoids National Insurance, and isn't taxed as a dividend on the way in.

The contribution has to be paid, not just decided on, before your year end to count in that accounting period. The annual allowance is £60,000 for most people, and unused allowance from the previous three tax years can be carried forward, provided you were a member of a registered scheme in those years. If you've had a strong year after several quieter ones, carry forward could allow a much larger contribution than the standard limit suggests.

The honest caveat: pension money is locked away until your late fifties at the earliest. It's excellent for profit you don't need to draw now, and the wrong answer for cash you need for a house deposit. Our pension contributions guide  sets out the numbers.

Checklist:

• Would I draw this profit as a dividend anyway, or could it sit in a pension instead?
• What are my annual allowance and unused carry forward from the last three years?
• If my income is high, does the tapered annual allowance apply? It starts once threshold income exceeds £200,000 and adjusted income exceeds £260,000
• Will the payment leave the company account before the year end?

Review Your Director's Loan Account

Look at your loan account balance now, not at year end. If it's overdrawn at your year end, you have nine months to repay it before Section 455 tax applies. For 2026/27 that rate is 35.75%, and it's charged on the outstanding balance.

If your balance goes above £10,000 at any point in the year and it's interest-free, there may be a separate benefit-in-kind charge. The official rate of interest is 3.75% for 2026/27, though it can now be adjusted during the year.

Checklist:

• Reconcile the loan account to the latest bank statements
• If it's overdrawn, decide how you'll repay it, whether through salary, a properly declared dividend, or a cash injection
• Remember the 30-day rule: repaying and re-borrowing within 30 days can undo the repayment
• Check whether any personal spending has been paid from the company account without being recorded

I usually suggest doing this review a month or two before year end, while there's still time to fix a problem. It's much easier to plan a repayment than to explain a surprise. Our director's loan account guide covers the rules in full.

Check Your R&D Position

If your company has spent the year solving genuine technical problems, this is the moment to consider a claim. Many directors assume they don't do R&D because they don't work in a lab, and are wrong.

Procedure matters now as much as substance. Some companies must notify HMRC of their intention to claim before submitting it, and every claim needs an Additional Information Form submitted before, or with, the Company Tax Return. Miss either and the claim can be rejected without anyone reading the technical detail. If you're loss-making and R&D-intensive, the enhanced scheme can be worth roughly 27% of qualifying spend in cash. Our R&D relief guide explains the process.

Checklist:

• Have we tackled any genuine technical uncertainty this year?
• Do we need to submit a claim notification, and by when?
• Are staff time records and project notes up to date?
• Do we have enough time before the tax return deadline to prepare the additional information properly?

Review Expenses, Mileage and Benefits

A year-end review of what your company has claimed is a good way to catch mistakes in both directions.

Mileage on your own car is now reimbursed at 55p a mile for the first 10,000 business miles, then 25p. If you've been claiming at 45p, correct it. If your company pays you for working from home, remember the tax-free employer payment is £6 a week, and that employees can no longer claim personal relief for unreimbursed home-working costs since April 2026.

For benefits, check whether you're within the trivial benefits limits (£50 per benefit, and a £300 annual cap for directors of close companies), and whether any staff event stayed under £150 per head, because going over turns the whole amount taxable. Our guides to allowable expenses, benefits in kind  and company cars and mileage have the detail.

Checklist:

• Are mileage logs complete and at the right rate?
• Have any personal costs been paid by the company and not recorded?
• Are P11D items and Class 1A National Insurance accounted for?
• Have any client entertaining costs been added back for tax?

Check Your VAT Position and Tidy Up Your Deadlines

Look at your rolling 12-month turnover. The VAT threshold is £90,000, tested over any 12-month period, not your financial year. If you're near it, plan for registration rather than being surprised by it. Our VAT guide explains the rules and the scheme choices.

Then check your calendar. Corporation tax is due nine months and one day after your year end. The Company Tax Return is due at twelve months, and Companies House accounts at nine months. Since April 2026, tax returns and accounts have to be filed separately, so make sure your process reflects that. Also confirm each director has verified their identity for Companies House, because an unverified director can hold up your confirmation statement. Our deadlines guide and Companies House guide cover both.

If your company has made a loss this year, don't forget it can be carried back against the previous 12 months' profit, potentially producing a refund, but it must be claimed. Our [losses guide](/blog/corporation-tax-losses) explains how.

Before Taking a Dividend

A dividend feels like a simple transfer. In law and in tax terms, it isn't. Get it wrong and you can end up with an unlawful payment reclassified as a director's loan. These are the checks I'd run every time.

Confirm You Have Distributable Reserves

A dividend can only be paid from realised profits after corporation tax. It isn't about how much cash is in the bank. A company can have plenty of cash and still lack the reserves to support a dividend, for example if there's a large tax bill coming.

Checklist:

• Check the latest management accounts for retained profit after tax
• Allow for corporation tax and any other liabilities due
• Confirm the dividend won't take reserves negative
• If in doubt, wait for updated figures before paying

I once had a client who took a large dividend in January, based on a healthy bank balance. When we prepared the accounts, most of the balance turned out to be VAT and PAYE owed to HMRC, and the reserves couldn't support the dividend. The payment had to be treated as a director's loan, and we spent the next few weeks unwinding it. A five-minute check beforehand would have avoided all of it.

Get the Paperwork Done at the Time

Every dividend needs a board minute recording the decision and a dividend voucher showing the date, amount and shareholder. Do it when you pay yourself, not months later when your accountant asks.

Checklist:

• Board minute dated on or before the payment
• Dividend voucher for each shareholder
• Payment made from the company account, matching the amount declared
• Copies stored where you'll find them at year end

Check Your Personal Tax Band

Dividends sit on top of your other income, so the rate depends on everything else you've earned. For 2026/27, the first £500 is tax-free. After that, dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band, and 39.35% in the additional rate band.

Two thresholds deserve special attention. Once total income passes £100,000, your personal allowance starts to shrink, creating an effective 60% rate on the income in that band. And if you or your partner claims Child Benefit, adjusted net income above £60,000 triggers the High Income Child Benefit Charge, which removes the benefit entirely at £80,000. A dividend that pushes you over either line costs more than the headline rate suggests. Our director's tax guide covers both.

Checklist:

• What is my expected total income for the tax year, including rental income, savings interest and other jobs?
• Will this dividend push me into a higher band, or over £60,000, £100,000 or £125,140?
• Could part of the payment be better made as an employer pension contribution?

Consider Who Else Owns Shares

If a spouse or family member genuinely owns shares and contributes to the business, dividends paid to them use their own £500 allowance and basic rate band. But this only works where the shareholding is real. HMRC has rules aimed at arrangements where one person receives the income while someone else controls the outcome, so it's worth taking advice before changing share ownership purely for tax reasons.

Think About Timing

Dividends count in the tax year in which they're paid. A dividend paid on 5 April is taxed in 2026/27. The same dividend paid on 6 April falls into 2027/28. That difference can move you between bands, change when the tax is due, and affect payments on account.

Also bear in mind that dividend tax isn't deducted at source. It sits as a liability until your Self Assessment is due on 31 January, so put the tax aside as you go. I usually suggest setting aside the expected tax the same day you take the dividend, rather than discovering it in January.

Compare Against Salary and Pension

Finally, ask whether a dividend is the right route at all. The gap between salary and dividends has narrowed sharply after the recent dividend tax rises, and a pension contribution often beats both for money you don't need immediately. Our guide to how directors should pay themselves has a worked example using current rates.

Before 5 April 2027

The tax year ends on 5 April. Most personal allowances and reliefs reset on 6 April and can't be carried over, so this is your last chance to use them.

Use Your Allowances

Every individual has a personal allowance of £12,570 and a dividend allowance of £500. If either is going unused, especially for a spouse or partner with little other income, consider whether income can sensibly be arranged to use them. Also remember the capital gains annual exempt amount, £3,000 for 2026/27. It's modest, but unused amounts are lost.

Checklist:

• Have I used my £12,570 personal allowance in full?
• Has each shareholder received at least £500 in dividends, where that makes sense?
• Do I have any gains to realise using the £3,000 exempt amount?

Make Personal Pension Contributions and Use Carry Forward

If you make personal contributions, tax relief is limited by your relevant earnings for the year, so salary matters. Check your annual allowance, including unused allowance from the previous three tax years, before the year closes. If you're planning a larger contribution, remember the taper and the £10,000 money purchase annual allowance for anyone who has already accessed pension benefits flexibly.

Review Your Salary Level for the Year

Confirm your salary is still the right level. For most sole-director companies with no other staff, £12,570 remains a sensible default, though the right figure depends on your circumstances. Salary above the £6,708 lower earnings limit gives you a qualifying year for the State Pension, and directors' National Insurance is calculated on an annual basis, so check payroll has applied it correctly before the year ends.

Watch Your Income Around the Thresholds

Look at your projected income for the year. Are you close to £60,000, £100,000 or £125,140? If so, a well-timed pension contribution or a change to when income is taken can save far more than it costs. Once you're past 5 April, most of these options are gone.

Think About Exits and Big Gains

If you're considering selling or closing your company in the next year or two, check your qualifying position now. Business Asset Disposal Relief applies at 18% for 2026/27 with a £1 million lifetime limit, and it depends on shareholding, trading status, and how long you've been an officer or employee. Fixing an eligibility problem takes time. Our guide to selling or closing a company covers the routes.

Prepare for Self Assessment

Get your records together now: dividend vouchers, salary records, P60, rental figures, and interest statements. If you're new to Self Assessment, remember you need to register by 5 October following the end of the tax year. Filing and payment are both due by 31 January, and if your bill is over £1,000 and less than 80% was collected at source, payments on account will apply. That means paying a year and a half of tax in one January. Start setting money aside now.

Checklist:

• Gather all income records for the year
• Check whether payments on account will apply
• Set aside cash for the 31 January payment
• Confirm your director and PSC identity verification is complete

Book Your Review

None of this needs to be done alone. A short planning meeting in the autumn is often the most valuable conversation we have with clients all year. It takes an hour, we look at your actual numbers, and we agree what to do before it's too late to do it.

Tax planning isn't about clever tricks. It's about making ordinary decisions in the right order and at the right time, using reliefs that exist precisely for that purpose. Most of the savings in this checklist come from doing something a few weeks earlier than you otherwise would have.

If you'd like us to work through this checklist with your own figures, whether that's your profit level, your dividend plans, or your personal position ahead of 5 April, get in touch with the team at Cannon Accountants. The earlier we start, the more options you have.

For the wider picture of how everything in this checklist fits together, head back to our complete Limited Company Tax Guide 2026/27 →.

Disclaimer:

The content of this blog is for general informational purposes only and should not be considered professional tax advice. The information is correct at the time of publishing but may change following future UK budget announcements or updates to HMRC guidance. Individual circumstances vary, and tax obligations can differ based on your personal situation. We strongly recommend consulting with us or a qualified tax professional to receive advice tailored to your specific needs.