12 Ways to Reduce Your Tax Bill Before 5 April 2026

The 2025/26 UK tax year ends on 5 April 2026. Once midnight passes, several valuable allowances vanish and new, higher tax rates kick in from 6 April. If you run a UK limited company, work as a freelancer, or own an agency, the next few days are your last chance to act.

The Autumn Budget 2025 confirmed dividend tax rates are rising 2%, Business Asset Disposal Relief CGT is jumping from 14% to 18%, and Making Tax Digital for Income Tax is finally going live. Every one of these changes makes it more expensive to wait. Here are 12 things you can do right now to keep more of your money.

What's Changing From 6 April 2026

Several tax changes announced in the Autumn Budget 2025 take effect on 6 April. Understanding what is changing explains why acting before 5 April matters.

1. Bring Forward Dividends Before Rates Rise

This is the single biggest opportunity for most limited company directors. Dividend tax rates increase by 2% from 6 April 2026. Every pound of dividends you take before that date is taxed at the lower rate.

To count for 2025/26, dividends must be properly declared with board minutes and a dividend voucher dated before 5 April. Only declare dividends if your company has sufficient retained profits. Declaring dividends without distributable reserves is unlawful.

If you are unsure about your salary and dividend split, speak to your accountant before declaring anything.

2. Maximise Pension Contributions

Pension contributions are one of the most tax-efficient ways to extract profit from your company. The annual allowance for 2025/26 is £60,000.

Employer pension contributions (made directly by your company) are particularly powerful. They attract no employer National Insurance (saving 15% from April 2025) and are fully deductible against Corporation Tax (saving up to 25%). That is a combined saving of up to 40% before the money even reaches your pension.

Use Pension Carry Forward Before You Lose 2022/23

Carry forward lets you use unused pension annual allowance from the previous three tax years. For 2025/26, that means 2022/23, 2023/24, and 2024/25.

You must have been a member of a registered pension scheme in each carry-forward year. Your relevant UK earnings must also be at least equal to any personal contributions (employer contributions are not limited by earnings in the same way).

3. Use Your ISA Allowance (£20,000)

The ISA allowance for 2025/26 is £20,000. It is a use-it-or-lose-it allowance that cannot be carried forward. Any investment growth, dividends, or interest within an ISA is completely tax-free.

You can split your £20,000 across cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs (up to £4,000 of the total). If you have already extracted profits from your company as dividends, sheltering them inside an ISA prevents future tax on the growth.

Even if you are not sure what to invest in, you can open a stocks and shares ISA, deposit the cash, and make investment decisions later. The important thing is getting the money inside the ISA wrapper before 5 April.

4. Use Your £3,000 CGT Annual Exempt Amount

The Capital Gains Tax annual exempt amount for 2025/26 is £3,000. It has been reduced from £12,300 just two years ago, so it is worth using every penny.

If you hold shares, funds, or other assets outside an ISA that have grown in value, consider selling enough to crystallise £3,000 of gains tax-free. You can then rebuy the same investments inside an ISA (known as "bed and ISA") so future growth is also tax-free.

Be aware of the "30-day rule" if you plan to sell and rebuy the same shares outside an ISA. If you buy back identical shares within 30 days, the disposal is matched to the repurchase and you do not crystallise the gain. Buying inside an ISA wrapper avoids this problem.

5. Review Your Salary vs Dividend Split

If you have not already taken a salary up to the optimal level for 2025/26, now is the time. For most directors, the optimal salary is either £12,570 (the personal allowance) or the NI primary threshold, depending on whether the company can claim Employment Allowance.

Taking salary up to the personal allowance preserves your tax-free amount and builds your National Insurance record for state pension purposes. Anything above the optimal salary level is usually better taken as dividends, though this calculation changes slightly each year.

Use our salary calculator to model the most tax-efficient split for your specific situation, or book a call and we will run the numbers for you.

6. Pay Off Your Director's Loan Account

If your director's loan account is overdrawn (meaning you owe money to your company), the company faces a s455 tax charge of 33.75% on the outstanding balance. This is payable 9 months and 1 day after the company's year end if the loan has not been repaid.

From 2026/27, the s455 rate increases to 35.75%, in line with the higher dividend tax rate. If your company's year end falls after 5 April 2026, you will be hit with the higher rate on any outstanding balance.

The best approach is to declare a dividend (at the current lower rate) and use it to repay the loan. This clears the overdrawn balance, avoids s455, and locks in the lower dividend tax rate. Two birds, one stone.

7. Claim Employment Allowance (£10,500)

Employment Allowance reduces your employer National Insurance bill by up to £10,500 per year. With employer NIC now at 15% (up from 13.8% in April 2025), this is worth more than ever.

Most employers qualify. The previous £100,000 NIC eligibility cap was removed from April 2025, opening it up to larger businesses that were previously excluded. The main exception is single-director companies with no other employees.

If you employ staff, freelancers on PAYE, or have more than one director on payroll, you almost certainly qualify. Claim it through your payroll software. If you have not been claiming in previous years, you can backdate claims for up to four years.

8. Accelerate Allowable Business Expenses

If you have been planning to buy equipment, renew software licences, or invest in professional development, doing it before 5 April means the expense falls into the 2025/26 tax year and reduces your current year tax bill.

For limited companies, two powerful capital allowances are available:

Common allowable expenses for agencies include computers, monitors, office furniture, software subscriptions, professional memberships, training courses, accounting and legal fees, and marketing costs. For freelancers, our tax deductions guide covers 25+ categories.

The key rule: expenses must be wholly and exclusively for business purposes. Do not manufacture fake expenses to reduce your tax bill. HMRC takes a dim view, and the penalties are not worth the savings.

9. Make Gift Aid Donations

If you are a higher or additional rate taxpayer, Gift Aid donations let you claim extra tax relief through your Self-Assessment return. The charity claims 25% on top of your donation (the basic rate tax), and you personally reclaim the difference between the higher rate and basic rate.

For a 40% taxpayer donating £1,000, the charity receives £1,250 and you reclaim £250 through Self-Assessment. At 45%, you reclaim £312.50.

Gift Aid donations also extend your basic rate band, which can be useful if you are close to the higher rate threshold or the £100,000 personal allowance trap. A well-timed donation before 5 April can reduce your effective tax rate on income that would otherwise be taxed at 40% or above.

You can also use a carry back election to treat donations made before 31 January in the current tax year as if they were made in the previous year. This can be useful for managing your tax bill across years.

10. Claim Marriage Allowance

Marriage Allowance lets the lower-earning spouse or civil partner transfer £1,260 of their personal allowance to the higher earner, saving up to £252 per year. The lower earner must earn below £12,570 and the recipient must be a basic rate taxpayer.

You can backdate claims for up to four years. If you claim before 5 April 2026, you can include 2021/22, giving you five years in total (2021/22 through 2025/26). That is up to £1,260 in total savings.

Apply directly through GOV.UK. The process takes about 10 minutes. If your spouse does not work or earns below the personal allowance (common for agency owners whose partners manage the household), this is free money you are leaving on the table.

11. Review Trading Losses and R&D Tax Credits

If your business made a trading loss in 2025/26, you can carry it back against profits from the previous year to claim a tax refund. For companies, trading losses can be carried back one year (or up to three years in the first four years of trading).

R&D tax credits are often overlooked by agencies. If your team builds custom software, develops proprietary tools, or solves technical problems that advance capability beyond what is readily available, you may qualify under the merged R&D scheme (ERIS). The enhanced deduction is 186% for qualifying expenditure, and loss-making SMEs can claim a payable credit.

The claim deadline is two years from the end of the accounting period. If your company's year end was 31 March 2024, the deadline for that R&D claim is 31 March 2026, just days away. Check your eligibility now.

12. Plan for Making Tax Digital

Making Tax Digital for Income Tax starts from 6 April 2026 for sole traders and landlords with gross income over £50,000. If that includes you, you need digital record-keeping and quarterly submissions to HMRC using compatible software.

Compatible software includes Xero, QuickBooks, FreeAgent, and several others. If you are still using spreadsheets, now is the time to switch. Setting up properly before the new tax year starts is far less stressful than scrambling mid-year.

If your income is between £30,000 and £50,000, you have until April 2027. Limited company directors are not directly affected by MTD for IT, but if you have personal self-employment income or rental income above the threshold, you will need to comply.

Use this as an opportunity to get your record-keeping in order. Clean books make everything else on this list easier, from pension planning to expense claims to your Self-Assessment return.

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Common Mistakes at Tax Year End

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