Year-end tax planning tips for UK businesses

When you're running a business, there's a lot to think about when it comes to being commercially successful and making a profit. If you don't have detailed knowledge of tax, it won't be obvious how you can run your business tax efficiently. 

That's where expert accountants come in. At TaxAssist Accountants we have the experience and skills to advise you and your business on changes you could make to save you tax and make your business more efficient. 

Here we delve into our top tax planning tips ahead of the tax year-end. 

Tax and National Insurance 

• Capital Gains Tax adjustments

When considering selling, gifting or disposing of an asset or assets chargeable to capital gains tax (CGT) we always recommend speaking to an accountant who can determine if there are any tax planning opportunities. 

• Capital Allowances 

Qualifying purchases of plant and machinery for your business are taxed differently to other purchases. Instead of tax relief on the purchase price, capital allowances are claimed. Different assets are entitled to different allowances; your accountant will know what you can claim when preparing your tax return. If you're considering purchasing a large piece of equipment, or a vehicle, speak to your accountant who will be able to advise you on the most tax-efficient option. 

Two changes to capital allowances were announced in the Autumn 2025 Budget – a new 40% First Year Allowance (FYA) which can be claimed on qualifying assets from 1st January 2026, and a reduction of the main writing-down allowance from 18% to 14% from April 2026.  

For tax planning opportunities with capital allowances see our guide here. 

• Annual Investment Allowance (AIA) – an annual limit of £1 million and is available on eligible purchases of plant and machinery.
• 100% First Year Allowance (FYA) – available on certain assets such as electric cars and zero-emissions goods vehicles until the end of the 2026/27 tax year.
•  ‘Full expensing’ which was made permanent at the Autumn 2023 Budget. Full expensing means companies (but not sole traders or partnerships) can claim 100% capital allowances on qualifying plant and machinery investments.
• A special rate FYA which gives companies 50% relief from profits before tax on new items that would fall in the special rate pool. 

• Research and Development (R&D) Relief

Businesses should be aware of and familiarise themselves with R&D requirements to ensure eligibility. Several sector specific R&D relief schemes are also available under the Government’s modern Industrial Strategy. 

Speak to your accountant if you are carrying out R&D activities. 

• Tax Deductible expenses 

Maximising tax deductible expenses is a key tax planning strategy. Staying up to date with what expenses are allowable and keeping good accounting records is essential to ensuring expenses can be included in your accounts and tax return and tax savings are possible. 

Business structure 

At some points in your business' life, it could be beneficial to change your business structure. Traditionally, as a business grew, incorporating was often advised as a cost-efficient choice because it gave lower overall tax costs and protection to the business owner from the limited liability a company structure provides.  

However, as the headline corporation tax rate increased by 6% in 2023 and income tax on dividends will increase by 2% for the basic and higher rates from 6th April 2026, this is now a more complex issue. 

You should continually evaluate your business structure and re-evaluate the benefits of incorporating or disincorporating with your accountant, as there may be tax savings opportunities. 

Need help with your year-end tax planning?

Contact TaxAssist Accountants for a free, no-obligation consultation to get a fixed fee quote

01756 541005

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Accounting 

• Cash basis accounting

The cash basis for accounting is now accessible to all businesses, regardless of their level of turnover. The cash basis accounting method offers a more straightforward approach to managing business finances. If you're not sure whether this is something to consider, speak to your accountant. 

• Companies House reporting changes 

Businesses should be aware of reporting changes coming from Companies House.

These changes will affect small and micro businesses who will see changes the accounts that Companies House require to be filed.  

Some changes, such as the requirement for directors and People with Significant Control to verify their identities have already begun, while other changes, such as those which would make filing accounts via software mandatory and increase the filing requirements for small and micro entities, have been postponed.

Leases and revenue recognition 

Small and medium-sized businesses (SMBs) who prepare accounts under Generally Accepted Accounting Practice in the UK (UK GAAP) face changes to the way they must prepare their accounts under FRS102 and FRS105 for 2026. The main changes are: 

• Leases moving on-balance sheet; 
• A new five-step revenue recognition model, and 
• Small entity disclosures. 

For more detail see our guide to the UK GAAP changes here. 

Employer 

• Employers’ National Insurance Contributions (NICs) 

NICs rates will remain the same for 2026/27 but with thresholds remaining the same until 2030/31, employers are likely to face higher NICs bills as wages rise.  

The Government also announced that it will cap the NICs-free part of the pension contributions under pension salary sacrifice schemes from April 2029, but this means employers and their staff can continue to benefit from the NICs savings from salary sacrifice schemes until then.

• Employment Rights Act 

The Employment Rights Act became law on 18th December 2025 and impacts the UK workforce with an upgrade to employment rights.  

The changes contained within the Act will be introduced over a two-year period, beginning in February 2026. Changes include Statutory Sick Pay (SSP) being available for all workers, day one paternity leave rights and more duties imposed on employers. Speak to your accountant today, we can refer you to one of our partners for employment law advice. ​

• National Minimum Wage

The National Living Wage (NLW) and National Minimum Wage (NMW) rates are rising from 1st April 2026. Businesses must budget for this increase, which could significantly impact finances, especially for those with numerous employees. The NLW rises to £12.71 per hour and the NMW rises to £10.85 per hour for 18- to 20-year-olds and £8 per hour for 16- and 17-year-olds and apprentices.  

• Employment Allowance 

Eligible employers can reduce their annual National Insurance (NI) liability by up to £10,500 with the Employment Allowance. The previous £100,000 eligibility has now been removed so more businesses will be eligible.

Get ready for Making Tax Digital for Income Tax 

Businesses must prepare for Making Tax Digital (MTD) for income tax, which means digital record-keeping and quarterly updates to HMRC for some businesses.  

Sole traders and landlords need to be MTD ready by April 2026, April 2027 or April 2028 depending on their income. For the April 2026 start-date this means those with qualifying income above £50,000. 

We are running a free webinar to help businesses prepare for MTD for income tax on 12th March 2026. Sign up here. 

Last updated 11 Feb 2024 | First published 28 Feb 2024

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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