26/02/2026
If you’re running a limited company, reducing tax isn’t about loopholes or dodgy tricks.
It’s about planning properly before your year-end.
Here are 7 legal ways that you can reduce your tax bill as a director (if you act early enough):
1️⃣ Pay yourself the right way
A mix of salary and dividends can reduce Income Tax and National Insurance, but it only works when profits are planned and tracked properly.
2️⃣ Make pension contributions
Company pensions are a deductible business expense, not subject to Income Tax or NI, with up to £60,000 per year available (subject to rules). One of the most tax-efficient options out there.
3️⃣ Claim every allowable expense
Software, subscriptions, business use of home, phone, internet, training and professional fees are commonly missed and that means overpaying tax.
4️⃣ Use capital allowances
Buying equipment, tech or machinery before year-end can reduce taxable profits. Timing matters, buy too late and the relief is delayed.
5️⃣ Check your VAT scheme
The wrong VAT scheme can quietly drain cash. Flat Rate, Cash Accounting or Standard VAT can make a big difference depending on your margins.
6️⃣ Reinvest profits instead of extracting them
You don’t need to pull everything out personally. Leaving profits in the business can reduce personal tax and strengthen long-term growth.
7️⃣ Plan early, not after your year-end has finished.
Most big tax bills come from leaving things too late. The real savings happen months before year-end, not after the accounts are done.
Tax efficiency isn’t about being clever.
It’s about being prepared.
If you want help planning ahead, forecasting profits and reducing tax, we’re here to help.
