Preparing early for year end gives you more options and fewer surprises. In our work with construction firms, engineers and tech-led businesses, we see the same pattern every spring: the owners who set aside time now tend to keep more of what they earn, improve cashflow and start the new year with a clear plan.
This guide shares practical tax planning tips for owner-managed businesses so you can make full use of allowances, reliefs and smart timing before 5 April 2026. We cover remuneration strategy, corporation tax, capital investment, research and development (R&D), pensions, capital gains and housekeeping that protects you from last-minute stress. We also point to reliable source materials and highlight a few sector-specific angles for project-based and innovation-driven companies.
Two quick context points. First, the personal allowance remains £12,570 in 2025/26 and income tax bands in England and Wales are unchanged (HMRC). Second, the capital gains tax annual exempt amount is £3,000 for 2025/26. The dividend allowance remains at £500, with dividend tax rates unchanged from last year. Construction output edged up 0.2% in July 2025, showing a mixed but resilient picture for the sector (Office for National Statistics (ONS), 2025). The Office for Budget Responsibility (OBR) currently projects 1.0% UK gross domestic product (GDP) growth in 2025 (OBR, March 2025). Against that backdrop, there’s plenty you can control between now and year end.
Put remuneration on the right footing
Getting your blend of salary, dividends and employer pension contributions right remains one of the most effective tax planning tips for owner-managed businesses.
- Personal allowance and bands: Keep an eye on the £100,000 taper point for the personal allowance. If your total income is near that threshold, consider pension contributions or employer-provided benefits to reduce adjusted net income.
- Dividends: The dividend allowance is still £500 in 2025/26. Confirm the right mix of salary and dividends for you, factoring in cashflow and any borrowing covenants.
- Pensions: Employer pension contributions remain a highly efficient way to extract value, subject to annual allowance rules (£60,000 standard annual allowance). Contributions are deductible for corporation tax if they meet the “wholly and exclusively” test and are paid before the year end.
Corporation tax – plan within the bands
Companies continue to face a main rate of 25% and a small profits rate of 19%, with marginal relief between £50,000 and £250,000. For groups and associated companies, these limits are divided between the entities, so forecasting matters.
- Profit smoothing: Where profits sit near the marginal zone, review timing of discretionary bonuses, pension contributions or qualifying spend to avoid drifting into a higher effective rate.
- Associated companies: Check associations that reduce your marginal relief thresholds.
- Payments: Large companies may have to pay corporation tax by instalments. Build this into cashflow forecasts to avoid strain.
Make full expensing and AIA work for you
Capital investment timing can materially change your bill.
- Full expensing: Companies can claim a 100% first-year deduction for qualifying main-rate plant and machinery. For many, that is an in-year tax saving worth up to the 25% main rate on the cost.
- Annual investment allowance (AIA): All businesses, including sole traders and partnerships, can claim AIA on most plant and machinery up to the prevailing limit (currently £1m). If you are not a company or your spend falls outside full expensing, AIA often delivers the same up-front benefit.
Practical steps
- Capital expenditure (capex) pipeline: Prepare a dated list of likely purchases and place orders so assets are brought into use in time.
- Project-based firms: For construction and engineering, map kit purchases to contract milestones to align tax relief with revenue.
R&D and innovation – don’t leave value on the table
If you create new or improved products, processes or software, revisit eligibility under the merged R&D expenditure credit (RDEC)/small and medium-sized enterprises (SME) regime.
- Eligibility: Focus on technical uncertainty and a competent professional baseline. Field trials on site, prototype iterations and data-driven process improvements often qualify.
- Records: Build contemporaneous notes, diagrams, Jira tickets and cost tracking.
- Sector angle: Construction tech, offsite manufacturing, BIM automation and environmental engineering are active R&D areas.
- Evidence base: UK business R&D spend reached £50bn in 2023, up 2.9% year on year (ONS, 2024).
Capital gains and business exits – use allowances and timing
Disposals of shares, property or business assets should be reviewed now, not in March.
- Annual exempt amount: £3,000 for 2025/26 per individual. Consider bed-and-ISA, crystallising gains and losses, and the timing of spouse or civil partner transfers.
- Share disposals: For tech-focused founders, align option exercises, share-for-share exchanges or secondary sales with your personal bands and allowances.
- Property: Residential property gains for individuals continue to attract higher rates – build this into proceeds planning.
Employment taxes and benefits – tidy up before 5 April
Employment costs have moved in 2025/26, so review payroll and benefits early.
- National insurance contribution (NIC) thresholds: Check Class 1 thresholds and any changes to employer rates and secondary threshold for planning staffing budgets.
- Electric vehicles benefits: Re-model benefit-in-kind for low-emission vehicles if you run a fleet.
- Trivial benefits: Stay within the statutory criteria to avoid unexpected charges.
- P11D accuracy: Confirm payroll vs P11D reporting and payment of Class 1A NIC on time.
Cashflow and project timing – practical steps for construction and engineering
Project-based businesses can improve year-end outcomes with small operational tweaks.
- Work-in-progress (WIP): Agree cut-offs with clients in advance so recognition is fair and documented.
- Retention and valuations: Track and chase to avoid profit write-backs after year end.
- Bad debts: Evidence attempted recovery to support relief where appropriate.
- Prepayments and accruals: Book early for known costs to avoid over-stating profit.
- Cashflow: Incentivise prompt payment on final quarter invoices to reduce financing costs.
Year-end checklist – simple actions with big impact
- Director loans: Repay or declare to avoid additional charges.
- Pensions: Use available allowance from the prior three years where eligible.
- ISA funding: Use the annual limit before 5 April to shelter future income and gains.
- Loss relief: Match to profit in the most tax-efficient period, considering rates and carry-back rules.
- Intra-group charges: Document arm’s length to support deductibility and VAT treatment.
Make the rest of 2025/26 count
Year-end planning is less about big gestures and more about a clear, early plan. Set targets for profit, remuneration and investment, then line up the paperwork so nothing is rushed in March. For many owner-managers, the winning moves this year are straightforward: model salary versus dividends with the £12,570 personal allowance in mind, use employer pension contributions to optimise the overall picture, and lock in capital allowances through full expensing or AIA on qualifying kit. If you innovate, build a simple R&D evidence file now rather than after year end. If you’re disposing of assets, make the £3,000 capital gains allowance work for you and coordinate timings between spouses. And for project-based firms, clean WIP, retention tracking and debtor discipline will boost cashflow and reduce unpleasant surprises.
If you want a personalised review, we can run a short, data-led year-end planning session that maps these tax planning tips for owner-managed businesses onto your structure, contracts and pipeline. We specialise in construction, engineering and tech-focused teams, so we can move quickly and keep it practical. Talk to us about a year-end review – we’ll scope it upfront and give you a clear action list you can implement with or without us.