As we approach the end of the tax year (5th April), it's crucial to review your financial situation and make the necessary adjustments to optimise your tax position.
Here’s a guide tailored for Company Directors to ensure you're fully prepared. In particular, this refers to directors who are also own their Limited Company.
1. Director’s Loan Account:
Review your director’s loan account to ensure it is within allowable limits and any overdrawn amount is repaid within 9 months of your year end to avoid tax charges.
2. Dividend Planning:
Consider the timing of dividend payments to minimise your overall tax liability. If you can, make sure to use the dividend allowance of £500 for this tax year.
3. Salary vs. Dividends:
Evaluate the most tax-efficient mix of salary and dividends for the upcoming tax year. The most recommended split is £12,570 in salary and the remainder in dividends; however, this may not be the best for your personal circumstances, so it is best to discuss this with your accountant.
4. Pension Contributions:
Make the most of company contributions to your pension scheme, as these are often more tax-efficient than personal contributions.
5. Review Benefits in Kind:
Ensure all benefits in kind are correctly accounted for and reported to HMRC to avoid penalties. From 2026 most benefits will need to be payrolled, but you can get ahead of it in 2025 by putting some or all benefits in kind through payroll.
6. Employer National Insurance Contributions (NICs):
Review the National Insurance contributions paid by your company. Consider strategies to optimise these, contributions such as salary sacrifice schemes, which can reduce both employer and employee NICs.
IMPORTANT NOTE: There are also a number of considerations listed in the employed individuals blog which are likely to impact Company Directors too.
Navigating the complexities of tax year-end can be daunting, but with careful planning and consideration, you can optimise your tax position.
At Drury Accountants, we are here to help you every step of the way. Contact us today for personalised advice and support.
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