Limited company tax planning for London businesses and directors.
Make salary, dividend, pension, investment and profit decisions while there is still time to act. Path Accountants connects your company’s Corporation Tax position with your personal tax position—then sets out the compliant options, trade-offs and next steps.
- Company and director position reviewed together
- Decisions considered before deadlines
- Recommendations documented with assumptions
Limited company tax planning is the forward-looking process of coordinating company profits, director remuneration, pensions, benefits, investment and cash needs before transactions or deadlines remove available choices.
Tax planning changes decisions. Tax preparation reports them.
A Corporation Tax return is based mainly on what has already happened. Planning starts earlier: with reliable records, a profit forecast, the director’s other income, the company’s cash needs and the decisions expected before year-end.
- Owner-managed companies
- Directors and shareholders
- London SMEs and contractors
- Growing or changing businesses
A useful tax review starts with live numbers and a real decision.
Generic year-end tips cannot account for your company’s cash, distributable reserves, associated companies, the director’s other income or the transaction being considered. Path builds the review around evidence that can support a compliant recommendation.
- 01Bring current recordsUp-to-date bookkeeping, a profit forecast, bank position and director’s loan balance.
- 02Define the decisionState what the company or director wants to pay, buy, invest, change or withdraw.
- 03Compare consequencesReview company tax, personal tax, cash flow, paperwork, timing and commercial trade-offs together.
The difference is timing, scope and a decision.
This page is deliberately separate from Path’s tax-return service. Both matter, but they solve different problems.
Records the completed period.
Accounts and returns calculate liabilities from transactions, elections and events that have already occurred.
- Statutory accounts and CT600 preparation
- Director Self Assessment, where required
- Compliance checks and filing deadlines
- Queries based on the completed records
Shapes the period before it closes.
Planning compares available routes before the company commits, pays, invests or reaches its accounting year-end.
- Profit and cash forecasting
- Company/director interaction
- Timing-sensitive options and paperwork
- Decision notes, owners and review dates
Six connected areas—not six isolated tips.
The right answer can change when profit, cash, other income, shareholdings, associated companies or future plans change. Path reviews the connections before recommending an action.
Director salary and dividends
Compare PAYE salary, employer and employee National Insurance, dividend tax, available distributable profits, personal allowances and the director’s other income. We do not treat one salary figure as universally “optimal”.
Corporation Tax and profit timing
Forecast taxable profit, check the small-profits and main-rate position, consider Marginal Relief, associated companies, losses and the timing of legitimate business expenditure or investment.
Company pension contributions
Review whether an employer contribution fits the company’s commercial position and the director’s pension allowances, prior input amounts, carry-forward availability and retirement objectives. Regulated investment advice is outside normal accountancy scope.
Benefits, expenses and payroll
Consider the tax and reporting treatment of benefits and reimbursed costs before the company provides or pays them. Payroll, P11D/P11D(b) and record requirements must match the chosen route.
Director’s loan account
Identify withdrawals, repayments, interest, benefit-in-kind exposure and close-company tax consequences early. A loan is not a dividend, salary or expense merely because money has left the company.
Investment, growth and exit decisions
Review asset purchases, financing, hiring, group changes, share incentives, disposals or succession before documents are signed. Complex legal, regulated or specialist tax work is scoped separately where required.
Start with the decision—not a list of tax reliefs.
Select a topic to see the questions a responsible review should answer. These are decision prompts, not automatic recommendations.
How should a director take money from the company?
The review models the company cost and the director’s personal tax together. It also confirms whether a proposed dividend is supported by distributable profits and the required records.
What profit and cash remain after Corporation Tax, payroll costs and working-capital needs?
What other income, allowances, tax bands, pension inputs or student-loan factors affect the result?
Are payroll submissions, board minutes and dividend vouchers complete and consistent?
How much is needed, when is it needed, and what trade-off is acceptable?
What changes as profit moves through the rate bands?
A forecast should include taxable adjustments, associated companies, short accounting periods and distributions from non-associated companies where relevant—not just the profit shown in management accounts.
Is the current profit estimate reliable enough to support a decision?
Are the £50,000 and £250,000 limits reduced because of associated companies or a short period?
Which commercial costs or investments are genuinely needed, and when will tax relief arise?
Has the company reserved enough for Corporation Tax and other liabilities?
Does company-funded pension saving fit the wider plan?
Tax relief, annual allowance, carry forward, tapered allowance, the money purchase annual allowance and the company’s commercial purpose can all matter. Capacity is checked before a payment is made.
What pension input has already been used in the current and relevant previous tax years?
Can the business afford the contribution without weakening working capital?
When must the contribution be paid for the intended accounting period?
Does the decision require a regulated financial adviser as well as a tax accountant?
What is the true company and personal cost of a benefit?
The cash price is only one part of the comparison. Income Tax, Class 1A National Insurance, VAT recovery, Corporation Tax deductibility and reporting may change the result.
Is the cost business-related, private, mixed-use or provided by reason of employment?
Should it go through payroll, a P11D/P11D(b), or another process?
Are receipts, mileage records, contracts and usage evidence available?
Would personal payment, reimbursement or a company-provided benefit produce a different outcome?
Has a withdrawal created a loan and a deadline?
The account is reconciled to establish who owes whom, when amounts arose, whether interest or a benefit must be considered, and whether repayment or another properly documented route is appropriate.
Is the account overdrawn, in credit or made up of several different transactions?
What was outstanding at year-end and what happened in the following nine months?
Do low-interest or interest-free loan benefit rules need to be considered?
Do records support any repayment, dividend, salary, expense or loan treatment?
What should be reviewed before a major change?
Hiring, purchasing assets, adding a company, issuing shares, selling a business or moving money between entities can create tax, legal and reporting consequences that are difficult to reverse.
What outcome is the transaction meant to achieve beyond tax?
Which company, shareholder or individual should contract, pay or receive value?
Is legal, valuation, regulated or specialist tax advice also required?
Which approvals, elections, valuations and documents are needed before completion?
A planning rhythm built around your year and your decisions.
Quarterly reviews suit some businesses, but not every company needs the same timetable. The cadence should reflect volatility, complexity and the number of decisions being made.
Initial planning review
Confirm company structure, shareholders, accounting year-end, other directorships, current remuneration, personal income, pension position, loan accounts, forecasts and the decisions expected over the next 12 months.
Periodic forecast check
Refresh profit, cash and tax estimates monthly or quarterly where useful. Compare actual results with assumptions and record whether a decision needs to change.
Pre-year-end planning
Review timing-sensitive actions with enough time for approvals, pension payments, payroll, purchases, dividends, loss claims or other valid steps to be completed correctly.
Tax-year crossover review
Where director income is involved, consider the 5 April personal tax year alongside the company accounting date. The two calendars rarely align neatly.
Post-year-end confirmation
Confirm what actually happened, update the tax reserve, prepare compliance work and carry unresolved decisions into the next review rather than treating filing as the end of planning.
Current figures directors should not use in isolation.
These figures help frame a review, but they do not produce a complete recommendation. Accounting periods, associated companies, other income and individual circumstances can change the result.
19%, 25% and Marginal Relief
For non-ring-fence profits, the small-profits rate is 19% at £50,000 or below and the main rate is 25% above £250,000, with Marginal Relief between. Limits can be reduced for short periods and associated companies.
GOV.UK rate table ↗£500 allowance; new 2026/27 rates
The dividend allowance remains £500. Dividend rates above available allowances are 10.75%, 35.75% and 39.35% for the basic, higher and additional bands in 2026/27.
GOV.UK dividend rules ↗Director pay needs a full employer calculation
The 2026/27 employee primary threshold is £12,570 a year and the employer secondary threshold is £5,000. Director National Insurance uses annual or alternative methods, and Employment Allowance eligibility must be checked.
Employer thresholds ↗Normally £60,000—sometimes less
The standard annual allowance is normally £60,000. It can be lower for high incomes or after flexibly accessing a pension, while unused allowance from the previous three tax years may be available subject to conditions.
Annual allowance guidance ↗Rates checked 6 August 2026. Scotland has different Income Tax bands for non-dividend income. Rules and rates can change; confirm the position at the date of each decision.
What proactive planning looks like in practice.
These examples show the review process, not a promised saving or advice for a particular company.
A company expects profit to rise above £50,000.
Path checks the forecast, taxable adjustments, associated companies and cash commitments. Legitimate planned spending, capital investment, pension funding and loss claims are considered for commercial fit and timing—without buying something merely for tax.
A director needs regular income and a one-off withdrawal.
Salary, dividend, pension, expense reimbursement and loan repayment are modelled separately. Available profits, payroll, other personal income, tax bands, company cash and paperwork are checked before choosing a mix.
A profitable company wants to fund a director’s pension.
Path reviews affordability, payment timing, the company’s trade and remuneration context, the director’s annual allowance and available carry forward. A financial adviser is involved where product or investment advice is needed.
Advice you can understand, act on and revisit.
The exact deliverables depend on the agreed engagement. A planning service should state the assumptions, responsibilities and next review—not finish with a vague instruction to “be more tax efficient”.
Position summary
Company structure, forecast, director income, cash requirements, constraints and key risks.
Scenario comparison
Relevant options compared on consistent assumptions, with company and personal effects separated.
Action register
Decision, owner, deadline, required paperwork and dependencies set out clearly.
Review date
A scheduled check or event trigger so the plan changes when the business changes.
Mohammad Hamza Pathan, ACA
ICAEW Chartered Accountant and director of Path Accountants. The review scope covers current UK tax terminology, key statutory figures, company/director interactions, compliance boundaries and where advice depends on individual facts.
Questions to ask before the year ends.
For a recommendation based on your company, bring current records, a profit forecast and details of the decision you are considering.
Browse all FAQs →It is the forward-looking review of company profits, Corporation Tax, director remuneration, pensions, benefits, investment, loan accounts and cash needs before decisions are made. It differs from preparing accounts and tax returns, which mainly reports the completed period.
At minimum, review early enough before the accounting year-end and the 5 April personal tax year-end to complete any valid action. Monthly or quarterly reviews may suit companies with changing profits, while a material contract, dividend, loan, pension payment, asset purchase or ownership change should trigger an additional review.
There is no single salary that is optimal for every director. The answer depends on other income, National Insurance history, Employment Allowance eligibility, number of employees, company profit, cash needs, benefits, dividends and personal circumstances. A calculation should compare the total company and personal result rather than repeating a generic figure.
A director who is also a shareholder may receive dividends, but only from profits available for distribution. Dividends do not replace payroll records for salary and must be declared and documented correctly. The director may owe Income Tax on dividends above available allowances. See GOV.UK guidance on taking money out of a limited company.
An employer pension contribution may be deductible when the relevant tax rules and facts support it, but relief is not automatic in every circumstance. The company’s commercial position, actual payment timing and the director’s annual allowance—including tapering, money purchase annual allowance and carry forward—should be checked before payment.
The £50,000 and £250,000 Corporation Tax limits are divided by the total number of associated companies, including the company being reviewed. A short accounting period can also reduce the limits. Control and association must be checked under the relevant rules rather than assumed from company names alone.
An overdrawn director’s loan account can create company tax and benefit-in-kind consequences depending on the amount, interest and repayment timing. The balance should be reconciled before deciding whether repayment, salary, dividend or another treatment is valid. Read Path’s section 455 tax guide for the core rules.
Bring up-to-date bookkeeping, management accounts or a profit forecast, company bank and loan balances, details of other companies, current salary and dividends, other personal income, pension contributions, director’s loan transactions and any planned purchase, investment, hire, share change or withdrawal. Better inputs make scenario comparisons more reliable.
Bring the decision—not just last year’s records.
Tell us what your limited company is likely to earn, what cash it needs and what you want to do next. We will explain the relevant planning scope, the information required and the fee before work begins.
- Accounting year-end
- Expected profit
- Current director pay
- Other companies
- Planned transaction
General information only; not personal tax, legal, pension-product or investment advice. Tax treatment depends on individual facts and current law. A written engagement should confirm the scope, assumptions and any specialist input required.