As your company’s accounting period draws to a close, it’s the perfect time to take stock and plan ahead. A few well-timed actions now can make your year-end process smoother, reduce your tax liability, and ensure your accounts reflect the most accurate financial position. Whether it’s making pension contributions, purchasing equipment, or reviewing director loans, these decisions can have a meaningful impact on your business. By thinking ahead, you’ll not only stay compliant, you’ll also make the most of available tax reliefs and set your company up for a strong start to the next financial year. Here’s what to consider before the year closes.
Pension contributions – making payments prior to accounts date
Tax relief is only available on pension contributions in the period they are paid. If you want additional pension contributions to be included in this accounting period then these must be arranged and paid before the accounting period ends. You should note that these must be company pension contributions into the scheme and not personal pension contributions which the company has paid on the employees’ behalf. If you are not sure you should contact your IFA.
Research and development (R&D) – can you make a claim?
If you are considering or have considered any innovative development within your business and incurred staff costs and software costs please let us know. There are considerable tax advantages in making a research and development claim. Please see our factsheet for more information.
An R&D Claim Notification Form must be submitted within 6 months of end of the accounting period. If this is not done you will not be able to claim.
Equipment purchases – discretionary purchases prior to an accounts date
Any equipment purchases before the accounts date will reduce the tax liability. If you are thinking about purchasing new equipment you may want to do this prior to the end of the accounting period. This will then mean that you receive the tax relief in this period instead of having to wait until the following year.
Dividends – to be voted prior to accounts date
For dividends to be included in the accounts these must be paid (or voted, recorded in minutes, documented and credited to a loan account) prior to the accounts date. Dividends do not reduce the company’s corporation tax liability.
Use of home as office claim – should you make a claim?
Small companies may choose to operate from home some of the time. It should be possible to establish a claim for tax relief on part of the home expenses using a simple rental agreement. If you believe this applies to you then please contact us so that we can ensure you collate the correct information to make a use of home as office claim. Any claim will need to be reported on your self-assessment personal tax return.
Stock take – do you need to schedule this?
If you hold stock then you complete a full stock take at least at the period end, we therefore recommend that this is scheduled now. You should list out any stock held including quantities, cost price and sales price.
Work in progress or invoiced in advanced – do you need to provide further details for accounts?
At the end of the accounting period you should consider whether there is any work that is in progress that has not yet been invoiced, or if any work has been invoiced that is not yet fully complete. In the accounts we need to recognise the income to match with the work done during the period and so may need to make an adjustment for this.
Director owes company – should you repay this before the accounting period?
If any director owes the company money then you might want to consider repaying this before the end of the accounting period. Such balances are required to be disclosed in the accounts and loans outstanding for more than 9 months will be subject to s455 tax at 33.75%. This tax is refundable 9 months after the accounting period the loan is repaid which can cause cash flow problems.
Interest on director loan – should you charge interest?
If the company owes anyone money then you might want to consider charging interest on this this balance. There would potentially be no tax on this if the individual’s non-dividend income for tax year 2025-26 is less than £12,570+5,000-interest charged. The interest rate must be within the bounds of commerciality, and we suggest 15% rate as an upper limit. There must be an agreement with the company to charge interest. This should be in place before the accounting period ends.
We can process this interest charge for £250+VAT. This includes calculating the interest payable, providing the agreement template, dealing with the required bookkeeping and accounting entries and completing the form CT61.
Loan term loans – is an agreement in place?
If the company owes anyone money and this will not be repaid until at least one year after the end of the accounting period, you might want to consider getting a formal agreement in place. This will then allow us to include the loan within non-current liabilities in the accounts. This will improve the net current assets on the balance sheet.
Future business plans
Thinking of expanding, restructuring, or making major changes? Let us know as there may be tax planning strategies worth implementing before the end of the accounting period/
Ceasing to trade
If your company is closing, please contact us. We’ll help you navigate the options and avoid unnecessary accountancy work.
If you would like to discuss this in more detail, please feel free to contact us or book a free online meeting.
