If you only think about tax once a year, you could be missing out. Year-round tax planning turns tax from a deadline into a habit – one that supports better cashflow, more confident decisions and fewer surprises. It matters more than ever. Income tax thresholds remain frozen, drawing more people into higher rates, and living costs are still elevated. HMRC now projects 7.08m people will pay higher-rate income tax in 2025/26, up almost 39% since 2022/23 – a clear sign of fiscal drag (HMRC, 2025).
Price pressures haven’t vanished either. The Office for National Statistics (ONS) reports Consumer Prices Index (CPI) inflation at 3.8% in September 2025 – still above the Bank of England’s 2% target, which means budgets remain tight and cashflow planning is vital (ONS Consumer Prices Index).
Against that backdrop, year-round tax planning helps owners align salaries, dividends, pension contributions, capital spending and profit extraction with the tax calendar. It’s not about dramatic moves – it’s about steady, sensible choices across the year so you keep more of what you earn, protect your position and avoid last-minute pressure.
Build a simple annual rhythm that protects cashflow
Set a rolling 12-month plan and review it quarterly. Small, well-timed actions compound.
- Quarterly reviews: Keep bookkeeping tidy, reconcile bank feeds and check profit versus forecasts – you can’t plan tax on guesswork.
- Allowance tracker: Personal allowance, £500 dividend allowance, £1,000 savings allowance (basic-rate), £3,000 capital gains annual exempt amount – map what’s used and what’s left.
- Pension cadence: Schedule employer and personal contributions through the year – don’t leave all relief claims to March.
- Payments on account: Estimate July and January liabilities early and set aside funds monthly – steadier cashflow, fewer surprises.
- Director pay mix: Revisit salary-dividend splits each spring and autumn – adjust to reflect profits, allowances and year-round tax planning goals.
- Record-keeping: Maintain evidence for research and development (R&D), business mileage and home-working costs – tidy records reduce risk and fees at year end.
If you’d like a structure to follow, our services hub shows how we support recurring reviews and compliance alongside planning throughout the year. See how we can help.
Year-round tax planning for individuals – practical steps
For company directors, sole traders and landlords, timing is often as powerful as the rate itself.
- Use the personal allowance: Keep an eye on tapering above £100,000. If you expect income between £100,000 and £125,140, consider pension contributions or Gift Aid to bring adjusted net income down – a core year-round tax planning lever.
- Dividends and salary: With the dividend allowance at £500 in 2025/26, spreading dividends across tax years can limit higher-rate exposure. Combining a modest salary with dividends can be efficient, but revisit it each April to reflect rates and allowances.
- Capital gains steps: The annual exempt amount is £3,000 in 2025/26 and the main capital gains tax (CGT) rates for individuals are 18% and 24% from 6 April 2025. Tidy actions include the following.
- Spousal transfers: Move assets between spouses or civil partners before a sale to use two exemptions.
- Bed and ISA: Sell and repurchase within an ISA to shelter future growth.
- Use losses: Crystallise and report capital losses promptly to offset gains now or in future.
- ISAs and LISAs: The overall ISA allowance remains £20,000 in 2025/26 – a simple, flexible shelter for interest, dividends and gains. Build it month by month rather than waiting for year end; it’s a straightforward year-round tax-planning habit.
- High-income child benefit charge: If one partner’s income exceeds £60,000, consider redistributing income or making pension contributions to reduce the charge.
- Inheritance tax groundwork: Use annual gifts (annual exemption: £3,000 per tax year) and consider regular gifts out of surplus income. Spreading gifts through the year supports cashflow and documentation.
Directors and owners: Keep profit extraction under review
Year-round tax planning for companies is about aligning drawings with profitability, cash needs and tax points.
- Corporation tax bands: The main rate is 25% with a 19% small profits rate and marginal relief in between. Forecast profits each quarter – if you’re nearing a threshold, timing capital investment or pension contributions may reduce the effective rate.
- Capital allowances: The annual investment allowance remains at £1m. Building a pipeline of ready-to-go investment lets you time purchases across accounting periods to optimise relief without straining cash.
- Pensions as employer contributions: Regular, budgeted payments can be deductible for corporation tax and help owners save for retirement. Ensure contributions fit within annual and, where relevant, carry-forward limits.
- R&D and creative reliefs: If you innovate or produce qualifying content, plan evidence gathering – project logs, invoices, subcontractor costs – from day one. Late-stage reconstruction is harder and risks HMRC challenge.
- Payroll and benefits: Class 1 employee national insurance contributions (NIC) remain lower on core bands in 2025/26, but employer NIC and benefits-in-kind still affect total cost. Review car policies, health cover and bonuses ahead of renewals so year-round tax planning and reward strategy are aligned.
Managing volatility: Cashflow buffers and no-surprises tax
Inflation remains above target and input costs can shift quickly. CPI inflation at 3.8% in September 2025 underlines the need for resilient cash reserves and rolling tax forecasts (ONS, 2025). Practical safeguards include the following.
- 12-month cash map: Plot VAT quarters, payroll peaks, payments on account and rent reviews – then build a buffer to cover at least one quarter’s liabilities.
- Interim dividends: Use management accounts to test headroom before declaring dividends – ensure profits and distributable reserves support the decision.
- Time-to-pay readiness: HMRC will consider arrangements where you engage early and share realistic forecasts; a clean ledger and timely filings help your case.
- Documentation discipline: Board minutes for dividends, loan agreements and director’s loan account reconciliations prevent later disputes and interest or penalties.
Governance and risk: Keep HMRC and Companies House onside
Good year-round tax planning bakes governance into routine.
- Deadlines diary: Self assessment, VAT returns, Construction Industry Scheme (CIS), PAYE, accounts and confirmation statements – allocate owners and dates, and automate reminders.
- Expense policy: Clear rules on what’s allowable reduce errors and keep benefits-in-kind under control.
- Capital gains and property: With CGT residential rates at 18% and 24% from April 2025, report disposals correctly and on time to avoid penalties.
- Dividend paperwork: Keep board minutes and dividend vouchers for every payment – simple files prevent queries later.
- Audit and assurance: Even when not mandatory, light-touch assurance can validate margins and working-capital assumptions – useful if you plan to borrow or sell.
How we help you turn plans into action
Year-round tax planning is effective when it’s integrated into your routine, not just added in March. We set up a simple calendar, align actions with your goals, and keep you accountable with regular touchpoints. The benefit isn’t just tax saved – it’s steadier cashflow, fewer last-minute decisions and more time to run your business. HMRC’s latest projections show more people moving into higher rates, and inflation remains sticky. In that environment, a little-and-often approach is the safest path.
If you’d like a calm, structured plan, we can help – from personal allowances and pensions to corporate investment and profit extraction. Explore how we work on our services page or speak to our team about year-round tax planning for your business and family. Get in touch today.