Plan for the Tax Year End

tax planning

This time of the year as we approach the end of the tax year we look at all the steps you need to take to make sure you are taking advantage of the tax savings measures available to you.  We will consider the different measures and help you plan for the tax year-end.

Although overall, these measures apply to your personal tax, it’s worth looking at business tax as so many of you will have a 31st March year-end, which aligns with the general end of the tax year which is on 5th April.


Business Tax

The Finance Act 2021 introduced a corporate tax of 25% for the 2023 financial year.  Almost twelve months in we know the painful point is between profits of £50,000 and £250,000. This is because you will pay:

  • 19% on profits up to £50,000
  • 25% on profits of over £250,000
  • Effective marginal rate of 26.5% when profit falls between the two

If your profits are in that nasty third category, speak to us this month.  Let’s see what we can do to reduce your corporation tax bill.  You may want to refresh yourself by revisiting our last blog on this subject here.



The rates applying to dividends increased in April 2022 at the same time as the National Insurance (NIC) rates were increased. However, a decision was made not to reduce the rates of dividend tax when the NIC increase was reversed in late 2022, so these remain at a higher end. The rates are:

  • Basic rate 8.75%
  • Higher rate 33.75%
  • Additional rate 39.35%

In addition, as announced in the 2022 Autumn Statement, the dividend nil rate band was reduced from £2,000 to £1,000 in April 2023, and will further reduce to £500 in April 2024.

It may be worth paying a £1,000 dividend now if you have not paid dividends in the current tax year and have a non-March year-end.

What’s more with the recent spring 2024 budget announcements which set out a reduction of 2% in employee NIC and increased Corporation Tax above, now is a good time to relook at your remuneration policy.  Call your normal manager for a chat and let us do some sums.


Directors Salary & Employment Allowance

Before deciding on the level of director’s salary we normally consider the facts as follows:

  • Whether the director is over the state pension age or not
  • Whether Employment Allowance is available (see below)
  • Whether 100% of the company profits are to be distributed, and
  • Whether or not the individual has other income


Typically, for directors within the standard age range, it is normal to set their salary at the same level as the NIC earnings threshold (secondary) to simplify administrative tasks. As of now, this threshold is at £758 per month. You will still be eligible for a state pension credit.

But if you have another co-director or an employee, you would be entitled to Employment Allowance against your Employer NIC of up to £5,000.  This means that your monthly pay can be increased from £758 to £1,047.50.

So, if you have had a change during the year and you have employed someone else or added a new director, you should review your payroll. Make sure you pay the larger amount to each director (and attract corporation tax relief) and claim the Employment Allowance.

Overdrawn Directors Loan Accounts

As you may know, if you have an overdrawn loan account, the balance remaining after nine months post-year-end attracts tax at the dividend rate.  The tax can be reclaimed but not automatically.  You need to write to HM Revenue & Customs.

You will also need to declare the benefit arising from a low or no-interest loan on the form p11d.

As the tax year end approaches, it is advisable to review your loan account and determine how you plan to discharge it. You may choose to declare dividends (assuming there are profits), declare a bonus, or clear or write off the loan. Each option has different tax implications depending on your circumstances.

Personal Tax

Planning for the tax year end is always helpful when it comes to your personal tax position.  The tax threshold has been frozen and the budget last week didn’t deliver any movement.  So what else can be done?

Remember if both you and your spouse are in the basic rate bracket, you can transfer any unused allowance from one of you to the other.  An election can be made up to two years after the end of the tax year.  You have until 5th April 2024 for tax year 2021/2022.

The other points to remember are:

  • Top up your pension plan
  • Review the investment in your Individual Savings Account (ISA) and utilise your allowances. ISA’s best rates 2024
  • Make use of your £3,000 allowance for Inheritance Tax
  • If you are making any charitable contributions make sure you make them under gift aid


Capital Gains Tax

The annual exemption for the next year is going to be reduced to £3,000 from the current limit of £6,000. Therefore, if you are planning to dispose of any investments, including investment properties, you should keep this in mind.

During the budget announcements last week, a reduction in the higher rate of tax for domestic property was also announced. From April 2024 onwards, the rate will be reduced from 28% to 24% if you are a higher-rate taxpayer.

If you are thinking of selling an investment property, depending on your numbers, then this might be more attractive after 6th April.

You also need to report any gains on residential property within 60 days and pay the tax.  We can help you with all of this. Have a look at how we can help you with your tax

You should know that the date of disposal for tax purposes is the date of exchange of contracts.  You should contact an agent like us as soon as possible after this exchange date.

This will allow time for fact-checking like costs, period of ownership and occupation, and registering with the government gateway.  The relevant date for the 60-day reporting is the completion date.

There is a lot to digest here when it comes to planning for the tax year end.  You are probably going to have a few questions.  Please feel free to call your normal manager at Myers Clark who will be happy to help you.  Remember there is only a short window to put the plans together if you are concerned about any issues discussed here.

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