As the end of the tax year approaches on 5 April 2026, it’s a good time for small limited company owners to check whether they have used the tax allowances available to them.
For most contractors, tax planning at this stage isn’t about complicated strategies. It’s usually just making sure that income and allowances have been used efficiently before the tax year closes.
Many small company owners simply want to know if there is anything they should be doing before the deadline. In most cases it comes down to checking that things like dividends, pensions and personal allowances have been used sensibly. A quick review before 5 April can often highlight simple opportunities to reduce tax.
Here are a few simple areas worth reviewing.
Check Your Salary and Dividends
Most contractor directors take a mix of salary and dividends from their company.
Before the end of the tax year it can be worth checking whether you have used your personal allowance (£12,570) and your dividend allowance (£500).
If you have taken very little dividend income during the year and your company has available profits, it may be worth declaring a dividend before 5 April 2026 to make use of these allowances.
Dividends must always be supported by company profits and properly documented.
Dividend Tax Rates Are Increasing Next Tax Year
From 6 April 2026, dividend tax rates are expected to increase.
The basic rate band is due to rise from 8.75% to 10.75%, and the higher rate band from 33.75% to 35.75%.
For contractor company owners who regularly take dividends, the timing of dividends around the end of the tax year could make a difference.
In some situations it may be more tax efficient to take dividends before 5 April 2026 rather than after, depending on your personal income levels and available profits.
Pension Contributions From Your Company
Company pension contributions can be a very tax-efficient way for directors to move profits from the company into long-term savings.
If your company makes the contribution directly:
- The company usually receives corporation tax relief
- There is no income tax or National Insurance personally
If you were planning to make a pension contribution for the 2025/26 tax year, it must be paid before 5 April 2026 to count in that year.
Use Your ISA Allowance
Although ISAs sit outside your company, many contractor directors use them alongside their company income planning.
For the 2025/26 tax year, you can invest up to £20,000 into an ISA.
Any growth or income inside the ISA is free from UK income tax and capital gains tax.
The allowance resets each tax year, so if it isn’t used by 5 April 2026 it is lost.
Consider Whether Your Spouse Uses Their Allowances
If your spouse or partner is involved in your company (for example as a shareholder), it may be worth checking whether they have used their own allowances.
Each individual has their own:
- Personal allowance
- Dividend allowance
- ISA allowance
Making use of both partners’ allowances can help keep tax bills lower overall.
Check Your Dividend Paperwork
Before the tax year closes, it’s also worth making sure that any dividends taken during the year have been properly documented.
That usually means:
- Dividend vouchers prepared
- Dividends recorded in the company accounts
- Director loan accounts kept up to date
Getting this right now makes preparing your personal tax return much easier later on.
A Quick Review Can Make a Big Difference
For most small limited company contractors, end-of-tax-year planning is simply about checking that allowances haven’t been missed.
With dividend tax rates set to rise from April 2026, it may also be worth thinking about the timing of dividends around the tax year end.
If you’re unsure whether you’ve used everything available to you this year, it’s always worth having a quick chat with your accountant before 5 April 2026.
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