9 June 2026 · 8 min read · Bruce Thomas
There is a meaningful difference between tax planning and tax avoidance. Planning uses reliefs as they were designed; avoidance contrives an outcome Parliament did not intend. The first is part of running a business properly. The second has an unhappy record for the people who buy into it.
Everything below sits firmly in the first category.
1. Claim every capital allowance available
Plant, machinery, commercial vehicles, tools, IT equipment and integral features within commercial buildings all attract relief. Businesses that have bought or refurbished premises are the most likely to have unclaimed amounts sitting there.
Timing matters too: expenditure falling just before a year end is relieved a full year earlier than expenditure a week later.
2. Review how you take money out
For company owners, the salary, dividend and pension mix should be recalculated annually. Thresholds move, profit levels move, and the answer that was optimal two years ago frequently is not now.
Employer pension contributions are often the single most effective extraction route: generally deductible for the company and not subject to National Insurance.
3. Use the whole household
Where a spouse genuinely works in the business, paying a commercial wage for real work is legitimate and uses their allowances. Share ownership, jointly held property and pension contributions across a couple are all worth reviewing.
The critical word is 'genuinely'. Payments for work not performed are not planning.
4. Do not overlook losses
Trading losses can often be carried back against earlier profits to generate a repayment, or carried forward. In a difficult year this can produce actual cash rather than a theoretical benefit.
5. Check whether R&D relief applies
Manufacturing and engineering businesses in particular often assume R&D relief is for laboratories. In practice, resolving genuine technical uncertainty in a process, tool or product can qualify. It must be a real claim, properly documented — HMRC's scrutiny in this area has increased sharply.
6. Get the timing right
- Bring forward qualifying capital expenditure before the year end where cash allows
- Consider deferring income into a period taxed at a lower effective rate
- Make pension contributions before the accounting period closes
- Clear an overdrawn director's loan within nine months and a day
- Use the ISA and pension allowances before 5 April
What to avoid
If an arrangement depends on an unusual reading of the law, involves loans that are never intended to be repaid, or is marketed with a promise of a specific tax saving, treat it as a liability rather than an opportunity. We do not implement schemes of that kind.
This article is general guidance for business owners in the UK and does not amount to advice for your particular circumstances. Tax rules change and the right answer depends on your figures — please take specific advice before acting.
