At Graham Wood, we’ve been helping high earners, self-employed professionals, landlords, and limited company directors take control of their finances for over seven decades with our high-impact tax planning advice. Whether you’re running your own business or building a property portfolio, strategic planning is key to staying ahead.
In this blog, we share a range of tax planning tips tailored to help you make the most of your income, reduce liabilities, and stay compliant. From personal allowances and dividend strategies to pensions and property ownership structures, these are the tax tips that can make a real difference when it comes to keeping more of what you earn.
Understanding Personal Allowances
Knowing how to use your allowances effectively is one of the most overlooked tax planning tips for high earners, landlords and limited company directors. Let’s break down the personal allowances that you could be entitled to:
Personal Allowance
It’s important to consider your own personal allowance. If you earn below £100,000, then the standard allowance of £12,570 applies to you. This means that the first £12,570 that you earn within the tax year is tax-free.
However, if your income exceeds £100,000, your Personal Allowance gradually reduces. So, for every £2 of net income above £100,000 (up to £125,140), your tax-free personal allowance will reduce by £1. Therefore, if your annual income reaches or exceeds £125,140, your tax allowance will be £0.
Marriage Allowance
Did you know that lower-earning spouses can transfer unused allowance? This is known as marriage allowance. In the UK, this tax benefit applies to those who are in a civil partnership, one partner earns less than the personal allowance and the other partner is a basic-rate taxpayer (earning between £12,571 and £50,270). Unfortunately, higher-rate or additional-rate taxpayers would be exempt from this benefit.
Using ISAs
You have an annual tax-free allowance of £20,000 for investing in ISAs. ISAs are a valuable tool for building tax-efficient savings. This allowance can also be split across various ISAs such as Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs, or a Lifetime ISA (subject to individual limits of the ISA).
Dividend Allowance
If you hold investments that pay dividends – such as shares in companies – the dividend allowance can help reduce your tax bill. It’s important to consider that the first £500 you receive in dividend income is tax-free. After this, your dividends will be taxed according to your income tax band:
Tax Band | 2025/26 Threshold | Tax Rate |
Personal Allowance | £0-£12,570 | 0% |
Basic Rate (Dividend) | £12,571 – £50,270 | 8.75% |
Higher Rate (Dividend) | £50,271 – £125,140 | 33.75% |
Additional Rate (Dividend) | £124,140 upwards | 39.35% |
If you’re unsure how these allowances might apply to your situation, our team are here to help. Get in touch with the Graham Wood team here for tailored tax planning advice.
Avoiding Common Self-Assessment Mistakes
Registering Late
It’s crucial that you ensure you register for Self Assessment on time. HMRC can issue a penalty if you register late. If you have income to report between 6th April 2024 and 5th April 2025, then you need to register by 5th October.
In addition, submitting late returns or payments could also land you with a financial penalty from HMRC. Filing your Self Assessment with an accountant can save you the stress and worry of getting your Self Assessment filed on time.
If you want to feel assured that your Self Assessment is submitted on time and correctly, speak to our accountants at Graham Wood.
Expenses
One common tax planning tip we give to clients is to not miss out on claiming allowable expenses. Expenses such as home office costs, professional subscriptions, and fuel costs can all be claimed as expenses. You can also claim interest charged on qualifying loans, such as
- loans from buying shares in a close company or partnership
- loans taken out by employee to buy plant & machinery
- loans to provide funds to a close company
If you’re unsure about what expenses you can claim for in your Self Assessment, then get in touch with the team at Graham Wood. Our expert accountants have decades of experience in submitting Self Assessments. So, you can rely on us to ensure you claim everything you’re entitled to.
Using Pension Contributions for Tax Efficiency
Pension contributions can reduce taxable income while building up savings for the future. The government offers tax relief on pension payments, meaning basic-rate taxpayers effectively get a 20% boost. For every £80 contributed, the government adds £20 – so £100 goes into your pension.
Higher-rate taxpayers (40%) can claim an extra 20% relief through Self Assessment. And, additional-rate taxpayers (45%) can claim even more, further lowering their tax bill. However, it’s important to keep in mind that the annual allowance is £60,000 per year (for the 2025/26 tax year). If you exceed this limit or your income is above the adjusted income threshold, contributions may be subject to tax.
Carrying Forward Unused Allowance
If you haven’t used all of your annual pension allowance in previous years, when you had an active pension scheme, you may be able to carry it forward. This is a great opportunity for making larger pension contributions without triggering a tax charge.
For more information on how pension payments can lower your tax bill, get in touch with us. You can simply pop into our Hyde-based office, or contact us by clicking here.
Tax Planning Tips for Limited Company Directors
If you’re a director of a limited company, there are several tax planning opportunities available to draw income efficiently and reduce your Corporation Tax liabilities.
Remuneration
Generally, the most efficient way of remunerating money from the company is via a salary of £12,570 with the remainder being taken as dividends.
However, there are other options for directors to reduce their tax bill. By paying pension contributions directly from the company, you can reduce Corporation Tax. How does this overall make more money for the individual?
Alphabet shares are another option for limited company directors. If you are married, you could look to give shares to your spouse. These will be free of Capital Gains Tax. You can also structure your shares to carry different rights, allowing you to take varying amounts of dividends. This can be a smart strategy to consider if your dividend income is pushing you into the higher-rate tax bracket.
Closure
Depending on the retained profits of the company, the company may have to go through a Members Voluntary Liquidation. This is often used when directors want to wind down a company that’s no longer trading, especially if there are significant profits left in the business. This means that the retained profits are taxed under the capital gains tax regime rather than income tax.
As long as the rules are met, Business Asset Disposal Relief may be available. This means that the income is taxed at:
- 10% (tax year 2024/25)
- 14% (tax year 2025/26)
- 18% (tax year 2026/27 onwards)
If you are married, you could look to give a smaller percentage of your shares to your spouse, prior to the closure. This would mean that their Annual Exempt Amount would be utilised. This is £3,000 (2025/26 tax year).
Corporation Tax Return – Claimable Expenses
Make sure you’re making the most of allowable company expenses. Some examples of what you, as a limited company director could claim for include:
- Trivial benefits for staff and employees
- Staff events
- Mobile phone
- Pension contributions
- Branded and safety clothing
- Equipment used for business (Annual Investment Allowance)
- Relevant insurance policies, such as:
- Relevant life policy
- Executive income protection
Tax Planning Tips for Landlords
Whether you own one property or a growing portfolio, being tax-efficient with your buy-to-let investments is essential.
Buy-to-let properties can either be owned personally or via a limited company route. There are significant differences in how these are taxed and, in the allowances available.
Ownership Structure & Tax on Profit
If you’re operating through a limited company, then your company would pay Corporation Tax at the applicable rate. This would be a minimum of 19%. The profits from the limited company would then be distributed to shareholders via dividends. As stated earlier, the first £500 would be tax-free. After this, tax would be applied according to the shareholder’s income.
Alternatively, if you are a landlord personally, rather than through a limited company, then you as an individual would pay tax on all rental profit. This would vary at 20% / 40% / 45% depending on your total income.
Mortgage Interest
For mortgage interest, individuals and limited companies are treated differently.
So, if you’re operating as an individual, then you cannot offset mortgage interest against profits and only gets a basic-rate tax deduction against their total tax liability. It’s also worth noting that this relief can be restricted depending on any losses brought forward and your adjusted total income. Any interest which doesn’t qualify for relief in the year is carried forward.
However, a limited company can offset mortgage interest as an expense against taxable profits.
Tax on Disposal
If you’re operating via a limited company, then you will pay corporation tax on the capital appreciation of the property at the applicable rate. To access your profits they must be distributed to shareholders, either via dividends or a capital distribution. It’s important to note that gains on the disposal of investment properties by a limited company are not eligible for Business Asset Disposal Relief, as the company is not considered to be trading.
When operating as an individual, you would be taxed under the Capital Gains Tax regime. The rates for residential property disposal are 18% (for basic rate taxpayers) and 24% (for higher rate taxpayers). As an individual, you would also have a tax-free Capital Gains Allowance of £3,000 per annum.
Other Tax Tips for Landlords
- You can ensure that the maximum allowances are used by transferring part ownership of the company or property into a spouse’s name. However, this will be dependent on their other income and whether they would be eligible for allowances.
- It’s so incredibly important to maintain a record of all costs associated with the property. This is so that your accountant can ensure that these are offset correctly on your tax returns.
- Speak to your accountant before investing in property. They will be able to assess which ownership route would be best for your individual circumstances.
- If you dispose of a residential property, this must be reported and any tax paid to HMRC within 60 days via a specific return. If you don’t complete this return could result in a penalty being imposed by HMRC.
Make the Most of Your Earnings
Even small adjustments to your tax planning can make significant savings. So, review your tax position and accounts with Graham Wood. Our accountants’ professional advice will ensure you’re making only the smartest decisions when it comes to being tax-efficient and compliant with your finances.
