For many business owners, January marks the end of one tax cycle.

Personal tax returns are filed, payments are made, and attention turns back to the day-to-day running of the business. It’s a natural reset point.

It’s also the moment when year-end tax planning should start.

With several tax changes now in force or approaching, and with decisions becoming harder to influence as the year progresses, this is a good time to step back and review what actions are worth taking before the end of the tax year.

Reviewing how you take money out of the business

How profits are extracted from a business continues to be one of the most important planning areas for owners.

Dividend tax rates have increased, and allowances are now much smaller than they were in previous years. For many owners, the traditional mix of low salary and dividends is no longer automatically the most effective option.

This is particularly relevant where:

• Business profits have changed
• Household income has increased
• Scottish Income Tax applies to salary or bonuses

A review at this stage of the year allows time to adjust the balance between salary, dividends, pensions and other options before decisions are fixed.

Pension contributions and longer-term planning

Employer pension contributions remain one of the most tax-efficient ways for business owners to extract value from a company.

They can reduce Corporation Tax while building long-term personal wealth, without the Income Tax or National Insurance charges that apply to other forms of extraction.

For owners who haven’t revisited their pension position recently, this is an area worth discussing early in the year, particularly where cash flow allows flexibility.

Capital investment and timing

Investment decisions should always be driven by commercial need, but the tax treatment of capital spend continues to evolve.

Recent changes to capital allowances, including new first-year reliefs for certain types of expenditure, mean the timing of investment can make a material difference to the tax position.

Where capital spend is already planned, reviewing the structure and timing now can help ensure relief is not missed.

Looking ahead to future exits and Capital Gains Tax

Even if selling the business is not on the immediate horizon, changes to Capital Gains Tax make early planning increasingly important.

Rates under Business Asset Disposal Relief have increased, which raises the cost of qualifying disposals and places more emphasis on meeting the conditions well in advance.

This is not about committing to a sale. It’s about keeping options open and avoiding last-minute changes that can restrict relief.

Benefits, payroll and compliance changes

There have also been changes to how benefits in kind are reported, with mandatory payrolling now delayed until April 2027 and P11D forms set to be phased out after that point.

Although the requirement won’t need to be implemented before the start of the upcoming tax year, it remains an important area for discussion. The shift will affect benefits such as company cars and medical insurance, and it reinforces the need to understand the true cost of providing benefits and how they fit into broader remuneration planning.

Digital reporting and HMRC expectations

Digital reporting is now a permanent part of the tax landscape.

Making Tax Digital for Income Tax is being phased in, and HMRC continues to move towards more frequent reporting and digital-first communication. Even where changes do not apply directly to a particular business owner, they reflect a broader shift towards increased transparency and scrutiny.

Tax planning is no longer just about rates and allowances. Systems and processes now matter just as much.

A conversation worth having now

With personal tax season behind us, this is a sensible point in the year for business owners to review:

• How profits are being extracted
• Whether pension contributions are being used effectively
• Planned capital investment and timing
• Exposure to higher dividend and Capital Gains Tax rates
• The impact of payroll and digital reporting changes

These are far easier conversations to have now than later in the year, when options may be limited.

If you would like to discuss how these points apply to your business, your bk plus adviser can help you understand what actions are worth considering before the year end.

For our full guide download here