Why tax planning in Watford should happen before 5/4
Most tax decisions are already made by the time a return is prepared. The dividend has been paid, the pension contribution was never made, the van was bought a week too late. An accountant who only sees your figures after the year has ended can report them accurately, but can rarely change them. That is the gap tax planning fills.
Good tax planning turns that round. We look at the year while it is still running, usually a few months before the company year end or before 5/4, and set out the choices in plain numbers. You decide what to do. Nothing we suggest relies on schemes or loopholes, and we will not promise a particular saving before we have seen your figures.
Paying yourself from a limited company
Directors of small companies usually take a mix of salary and dividends. Salary is a cost for the company, so it reduces corporation tax, but above certain levels it brings National Insurance for both you and the company. For 2026/27, employer National Insurance starts at £5,000 a year and employee National Insurance at £12,570.
Dividends come out of profit that has already been taxed. They carry no National Insurance, and the first £500 each year is covered by the dividend allowance. Above that, dividends are taxed at 10.75%, 35.75% or 39.35% depending on your other income. A company can only pay dividends from profits available for the purpose, so the accounts need to support each one.
The right mix depends on your other income, whether the company has other staff and whether it can claim the Employment Allowance. A company where the sole director is the only employee paid above the secondary threshold cannot claim it. We model the options side by side so you can see the effect.
What is included
- Salary and dividend planning for directors
- Personal and company pension contribution planning
- Reviewing family shareholdings and salaries
- Checks on the £100,000 taper and child benefit charge
- Timing of dividends, bonuses and asset sales
- Capital allowances planning before year end
- Written summary of options and deadlines
- Referral to capital gains and inheritance tax advice where needed
Pensions as part of the plan
Pension contributions are often the most effective tool available. A contribution paid by your company is usually an allowable cost for corporation tax, as long as your overall pay is reasonable for the work you do. It also avoids National Insurance.
Most people can contribute up to £60,000 a year with tax relief, and unused allowance from the previous 3 tax years can sometimes be carried forward. Personal contributions also reduce your adjusted net income. That matters if you are close to £100,000, where the personal allowance starts to fall away, or above £60,000 with children, where the child benefit charge applies.
Family companies and shared income
Many businesses in Bushey, Kings Langley and around Watford are run by a couple, with one partner doing most of the work. Giving a spouse shares so they receive dividends at a lower rate can make sense, but it needs care. HMRC can use the settlements rules to tax the income on the person who really earned it, especially where the shares carry little more than a right to income.
Paying a family member a salary is fine when they do real work for a fair rate. It is not fine as a way to move profit to someone who does little or nothing. We look at what each person actually does before suggesting any change. For couples outside a company, the marriage allowance lets a lower earner transfer £1,260 of personal allowance to a basic rate partner.
Timing income, costs and gains
The date something happens can change the tax on it. A dividend paid on 5/4 falls in a different tax year from one paid on 6/4. Spreading a share sale across two tax years can use two years of the £3,000 capital gains annual exempt amount. Assets can usually pass between spouses or civil partners who live together without capital gains tax, which lets both allowances be used.
For companies, full expensing gives tax relief on qualifying new plant and machinery in the year it is bought. Buying equipment you need anyway before the year end can bring that relief forward, but buying something just for the tax relief rarely makes sense. Landlords should also plan ahead for the separate, higher rates on property income announced from 6/4/2027.
Gains, estates and where this page stops
This page covers everyday tax planning for income and businesses. Selling a business, a second home or a large investment needs its own advice, and so does passing wealth to the next generation. Our capital gains tax and inheritance tax pages explain those services in detail, and a planning review will flag when either is needed.
What a planning review looks like
We start with your latest accounts, tax returns and management figures, plus a short video call about your plans for the year. Then we send a written summary of the options with the numbers, the risks and the deadlines that apply. Most clients in Watford, Borehamwood and the rest of Hertfordshire do this once a year, with a check in if something big changes.
Fees are fixed and agreed before any work starts, after a free review of your situation.
Who this suits
- Directors of small limited companies
- Couples who run a business together
- Self employed people with rising profits
- Higher earners near £100,000
- Landlords planning for the 2027 property rate change
Common questions
What is the best salary for a company director in 2026/27?
There is no single answer. It depends on your other income, whether the company has other employees and whether it can claim the Employment Allowance. We work through the figures for your company and show you the effect of each option.
Can I pay dividends to my husband or wife?
It is possible if they own shares, but HMRC can tax the dividends on you under the settlements rules in some cases, especially where the shares carry only a right to income. The structure needs to be set up and documented properly.
Is it better to pay into my pension through my company?
Often, yes. Company contributions are usually an allowable cost and avoid National Insurance. They still count towards your annual allowance, so the amount needs to fit within your limits.
When should I start tax planning for the year?
Ideally a few months before your company year end or before 5/4 for personal tax. That leaves time to act on the advice. Planning after the year has ended has very little effect.
Is tax planning the same as tax avoidance?
No. Planning means using allowances and reliefs in the way they are intended, such as pension relief or the dividend allowance. We do not recommend avoidance schemes or arrangements designed to get round the rules.
Will tax planning definitely reduce my bill?
We cannot promise a saving before we have seen your figures. Sometimes the review confirms that your current setup is already sensible. When there are better options, we show you the numbers so you can decide.
Should I buy a new van before my company year end?
If you need it anyway, buying it before the year end can bring tax relief forward. Vans and cars are treated differently, and buying something only for the relief rarely makes sense. We check the rules for the asset before you commit.