Most limited company directors have a reasonable idea of what their corporation tax bill is going to look like well before the year end arrives.
Fewer act on it in time to change it.
That gap - between knowing and doing - is where a significant amount of tax gets paid unnecessarily every year.
This article covers the corporation tax planning steps worth taking before your financial year closes, why the timing matters more than most people realise, and what the numbers can actually look like when the right conversations happen early enough.
This article is most relevant if you are:
If any of those apply, read on.
Before looking at planning options, it is worth understanding how your profit level affects the rate you pay - because corporation tax in the UK is not a flat rate, and many business owners do not realise that.
For 2026/27, the rates are:
That last point catches people out. If your profits sit in the £50,000 to £250,000 range, each additional pound of profit is effectively taxed at 26.5% - higher than the headline 25% rate. That makes corporation tax planning especially valuable for businesses in that band, where reducing taxable profit has an outsized impact on the bill.
It is also worth noting that if you have associated companies - businesses under common ownership or control - the thresholds are divided between them. A business with one associated company has effective thresholds of £25,000 and £125,000, not £50,000 and £250,000. This is a common planning consideration for owner-managed groups and one that is frequently overlooked.
Once your financial year ends, your taxable profit is largely fixed. The decisions that change it - pension contributions, capital expenditure, remuneration timing - need to happen before that date.
For most businesses, the final six to eight weeks of the financial year are the most important year end planning window of the year. If your accountant is not proactively in touch during that period, that is worth noting.
Employer pension contributions
Employer pension contributions made through the company are fully deductible against corporation tax, provided they satisfy HMRC's wholly and exclusively test and are paid before the year end. Unlike personal contributions, there is no requirement for the director to have relevant UK earnings - the company contributes directly to the director's pension.
Crucially, unused annual allowances can be carried forward for up to three years. A director who has not been contributing consistently may have significantly more pension headroom than the current year allowance alone suggests.
Earlier this year, we were engaged by a four-director owner-managed business ahead of its March year end. The company had traded strongly and was facing a projected corporation tax liability of £80,000. By reviewing each director's available pension allowances - including brought-forward relief from prior years - and structuring employer contributions before the year end closed, we reduced taxable profit from £320,000 to £80,000, cutting the corporation tax bill to £16,000. A saving of £64,000 in a single planning exercise. The full case study is here.
Director bonuses and remuneration timing
Many business owners overlook the fact that timing director remuneration can materially affect both the company's corporation tax position and personal tax. A bonus accrued and paid before the year end is deductible against the current year's profits - provided it is paid within nine months of the period end and meets HMRC's requirements. Getting this timing right, alongside the salary and dividend split, can meaningfully reduce the overall tax position across both the company and the individual.
Capital expenditure
If the business is planning to purchase equipment, machinery or other qualifying assets, timing matters. Assets purchased before the year end can attract Annual Investment Allowance - currently £1,000,000 - giving 100% first-year relief against taxable profits. An asset purchased one day after year end generates no relief until the following year.
Salary and dividend planning
The balance between salary and dividends affects both personal tax and the company's corporation tax position. Getting this wrong - either leaving value trapped in the company unnecessarily or drawing income inefficiently - is common. The optimal structure depends on the overall picture: other income, pension position, profit level and longer-term plans. It should be reviewed annually, not set once and forgotten.
Prepaying allowable expenses
Certain expenses accrued before the year end but paid shortly after can still be deducted in the current year under HMRC's accruals basis, provided they meet the relevant criteria. Not all expenses qualify, but it is worth reviewing with your accountant before the year closes.
If your year end is within the next three months, now is the time to review your management accounts and get a clear view of your projected taxable profit. The earlier you identify potential exposure, the more planning options remain available - and the more time there is to implement them properly.
One practical note worth flagging: HMRC withdrew its free online filing service for Corporation Tax returns from 1 April 2026. If you have previously used the HMRC portal to submit your CT600, that option is no longer available. All companies must now use commercial software to file. If your current setup has not been reviewed, it is worth confirming your filing process is in order before your next deadline arrives.
The businesses that consistently pay less corporation tax are not doing anything unusual. They are having the right conversations earlier - with enough lead time to act before the deadline arrives.
Our accountants in Weybridge and Twickenham work with limited company directors and owner-managed businesses across Surrey and South West London. If you want to understand what corporation tax planning opportunities are available to your business before your year end closes, find out more about our corporation tax planning services here or visit our accountancy page.