As year-end approaches, there’s still time to take smart steps to reduce your corporation tax bill. From capital allowances to succession planning, these strategies can boost cash flow, ensure compliance, and position your business for long-term success. Here, Tax Partner Brian Kelly outlines practical, actionable ways to optimise your corporation tax position before year-end – helping reduce liabilities and keep your business compliant.

As year-end approaches, many business owners and finance teams begin focusing on closing out the books. But it’s also the perfect time to take proactive steps to optimise your corporation tax position. With the right planning, you can reduce your tax liability, improve cash flow, and ensure compliance with Revenue expectations. Basically, all the good stuff.

Here are some practical strategies to consider before the year wraps up:

1. Maximise capital allowances.

Review your fixed asset register and ensure all qualifying capital expenditure is being claimed. This includes:
– Plant and machinery.
– Office equipment.
– IT infrastructure.
– Fit-outs and refurbishments.

2. Review directors’ remuneration and bonuses.

Paying a year-end bonus to directors or key staff can be tax-efficient if structured correctly. Bonuses are deductible for corporation tax purposes if they are accrued and paid within a specified timeframe.

3. Pension contributions.

Company pension contributions are fully deductible against profits, provided they are paid before the year-end.

4. Utilise trading losses.

If your company has incurred trading losses, ensure they are being used effectively:
– Carry forward against future profits.
– Carry back to prior periods (if applicable).
– Group relief to offset profits in other group companies.

5. R&D tax credits.

If your company is engaged in qualifying R&D activities, you may be entitled to a tax credit of up to 30% of your R&D expenditure (both revenue and capital) for accounting periods commencing on or after 1 January 2024.  Additionally, the standard deduction may also be available.

6. Review intercompany transactions.

For groups, ensure that intercompany charges (e.g. management fees, royalties, interest) are properly documented and reflect commercial reality.

7. Consider the timing of income and expenses.

If you’re on an accruals basis, consider deferring income or accelerating deductible expenses where appropriate.

8. Plan for succession and exit.

If you’re considering a future sale or transfer of the business, now is the time to review your structure. Reliefs such as Retirement Relief and Entrepreneur Relief require planning – and, as everyone says, it’s generally a much lengthier process than you think.

Final thoughts.

Year-end tax planning isn’t just about minimising this year’s bill – it’s about setting your business up for long-term success. If you or anyone on your team would like to discuss any of the strategies above or explore bespoke planning opportunities, Fitzgerald Power’s tax team is here to help. Get in touch here.

We can assure you we’ve seen it all, and there is no question too tiny.