Tax Planning for Harrow small businesses — matched to a specialist.
Tax planning done a month before year-end saves money. Tax planning done in January, when you're filing, mostly just files.
Forward-looking work on corporation tax, dividend policy, capital extraction, and personal income tax for the directors of Harrow limited companies and the highest-earning sole traders. The accountant we match you with reviews your structure, models the tax impact of upcoming decisions (selling, hiring, expanding, retiring), and identifies the legal reliefs that apply. Tax planning isn't aggressive avoidance schemes — it's the applied use of the reliefs in the Income Tax Act, Finance Acts, and HMRC manuals that Parliament built into the system.
How the work actually breaks down.
The first conversation in any Harrow tax-planning engagement is about the next 12 to 36 months — not the prior year. What's coming: a sale, a buy-out, hiring, expanding, retiring, succession, divorce, emigration, return-to-UK after a non-resident period? Each of these triggers different planning levers. A founder selling their company in 18 months has an entirely different planning landscape from a steady-state owner-director taking salary and dividends. The accountant scopes the engagement based on what's coming, not on what's already filed.
For owner-directors, the workhorse tax-planning question is salary vs dividend extraction. The optimal split changed materially when corporation tax went tiered in April 2023 — companies with profits over £50,000 pay marginal-rate corporation tax up to 26.5% in the £50k-£250k band, before settling at 25% above £250k. Dividends, taxed at 8.75% / 33.75% / 39.35% basic / higher / additional rate after a £500 allowance, look more or less attractive depending on the company's marginal corporation tax rate. The accountant models the post-tax cash on a £100k extraction across different splits, then recommends a policy. Most Harrow PSCs end up at salary at the secondary NIC threshold (£12,570) plus dividends, but a profitable company with multiple shareholders or an alphabet share structure has more complex options.
Capital allowances are where the biggest legal-tax savings often hide. The Annual Investment Allowance gives 100% first-year deduction on plant and machinery up to £1 million a year. Full Expensing — introduced in April 2023, made permanent in April 2024 — gives 100% first-year deduction on main-rate plant and machinery with no cap, available to companies (not unincorporated businesses). Structures and Buildings Allowance gives 3% straight-line deduction on commercial property construction or renovation costs. Electric vehicle allowances are 100% first-year for new EV cars and 50% special-rate for other low-emission vehicles. The accountant reviews capital expenditure timing and structure to claim the highest-value relief — which often means accelerating a planned purchase by a few weeks or restructuring it as a cash purchase rather than HP.
R&D tax credits are a Harrow opportunity that's both real and abused. Genuine R&D activity — solving a scientific or technological uncertainty that wasn't readily resolvable by a competent professional — qualifies for either an enhanced corporation tax deduction (SME scheme, 86% uplift on qualifying R&D expenditure as of April 2023) or a payable cash credit. The 2023-24 reform tightened the rules significantly: claims must be notified in advance for first-time claimants, the additional information form is now mandatory, and HMRC's enquiry rate has risen sharply. A real Harrow R&D claim from a software, engineering, or product-development business is still worth pursuing. A spurious one — bookkeeping software 'innovation', cosmetic website redesigns called 'technology' — will get rejected and might trigger a discovery enquiry into the company's wider tax affairs.
Pre-exit planning is where tax planning earns the largest absolute fees. Business Asset Disposal Relief (BADR, formerly Entrepreneurs' Relief) reduces capital gains tax to 10% on up to £1 million of lifetime gains from selling shares in a personal trading company — but the eligibility tests are strict: 5% ownership, 5% voting rights, employee or director status, two-year qualifying period for all of the above. A founder selling their Harrow company without proper planning often discovers in the deal-room that one of the conditions isn't met (a recent share restructure broke the 5% test, the spouse holds shares but doesn't qualify, the holding period started later than thought). The accountant restructures ahead of sale to ensure BADR is preserved, models the post-sale tax position, and coordinates with the M&A solicitor on warranty and indemnity provisions. Get this right, and the saving is hundreds of thousands; get it wrong, and CGT runs at 24% instead of 10%.
Where the standard playbook doesn't apply.
The £100,000 personal allowance taper is the most common Harrow tax-planning trap for higher earners. Once total income exceeds £100,000, the personal allowance reduces by £1 for every £2 above the threshold, fully tapering at £125,140. The effective marginal income tax rate inside that band is 60% (40% income tax plus 40% on the £1 of allowance lost per £2 earned). Many owner-directors in this band benefit substantially from pension contributions, charitable Gift Aid, or deferring income into a future tax year — restoring the personal allowance and dropping back into the 40% band. The planning is not exotic; it just has to happen before tax year-end (5 April), not afterwards.
Dividend timing across tax years matters when the Harrow business has variable profits. A director with a profitable year followed by an expected lean year can defer dividend payments (subject to having reserves) into the lean year to use up basic-rate band allowances twice. Conversely, accelerating a final dividend before 5 April can be attractive when the next tax year's bands or rates are tightening — as happened with the dividend tax rate increases of 2022. The accountant models multi-year extraction strategies so the directors take post-tax cash steadily across years, not just in the year the company is most profitable.
Company-held property has unique tax characteristics. Property held inside a trading company (or a property investment company) doesn't qualify for Business Asset Disposal Relief on sale. Property held as a director's personal asset and rented to the company has different VAT and CGT treatment — and any director's loan account interactions need watching to avoid Section 455 corporation tax (32.5% on outstanding director's loans more than nine months past year-end). When a Harrow business has property aspects — owning the trading premises, holding investment property, or considering a property purchase — the planning needs to consider not just current tax but how the structure interacts with eventual exit, succession, and inheritance.
Inheritance tax planning on shares in a private trading company benefits from Business Property Relief (BPR) — 100% relief from IHT on shares held for two years in a wholly or mainly trading company. But BPR is fragile: a company that's evolved to hold significant investment property or cash on its balance sheet (over 50% of assets being non-trading) loses partial BPR, and the threshold tests are applied at the date of death. A Harrow business owner with a healthy cash balance and an ageing structure should review BPR exposure annually; the planning lever is usually to extract cash through dividends (re-investing in trading activity, distributing to family) rather than letting it sit on the balance sheet eroding BPR.
How a real Harrow engagement actually plays out.
Profitable Harrow PSC — extraction policy review
A Kenton-based IT contractor PSC with £140k annual profit. Existing extraction was £8,000 salary plus £80k dividends, leaving £52k of retained profit subject to corporation tax at marginal rate. The accountant modelled three alternatives: (a) salary at secondary threshold (£12,570) plus higher dividends, (b) substantial pension contribution to use the £60k annual allowance, (c) capital extraction via voluntary liquidation in three years to capture BADR. The recommendation was a combination — raise salary to £12,570 (use full personal allowance, gain qualifying NIC year), make a £30k personal pension contribution (saving 40% income tax plus reducing the £100k taper exposure), and review the BADR-eligible liquidation question separately at year three. Net annual tax saving: ~£11k.
Harrow R&D software business — claim preparation under the 2023 rules
A software house in HA2 building a niche logistics SaaS, ~£480k turnover, four developers including the founder. The accountant reviewed the prior year's development work against HMRC's R&D criteria, identified £180k of genuinely qualifying R&D expenditure (developer salaries, externally provided workers, consumables), and prepared the claim under the new SME scheme with the 86% uplift. Additional information form completed and pre-notified. Claim filed alongside the corporation tax return; HMRC processed it within the standard 28-day window without enquiry. Cash benefit: ~£40k of additional corporation tax saving. Engagement fee was a fixed percentage of the cash benefit — a common pricing structure for genuine R&D work.
Whetstone-based founder — pre-sale planning, BADR preservation
A founder of a Whetstone-based marketing consultancy, planning a sale at ~£2.4m valuation in approximately 24 months. The accountant identified that an earlier share restructure had broken the 5% voting-rights test for the founder's spouse (a 6% shareholder), threatening the spouse's BADR eligibility. The remediation: pre-sale share reorganisation to restore the spouse's voting rights two years before exit, ensuring the holding-period clock restarted in time. Post-sale modelling showed total CGT saving of ~£140k versus the do-nothing scenario. Engagement also included EMI option scheme review for two senior employees who would receive option grants ahead of exit (their gains qualifying for the lower 10% BADR rate via the EMI route).
The work a matched specialist actually takes off your desk.
Scope varies between accountants in the network, but this is the common baseline you can expect from a tax planning engagement.
- Salary-vs-dividend extraction modelling for owner-directors
- Marginal-rate corporation tax planning under the post-2023 tiered regime
- Capital allowances optimisation (AIA, Full Expensing, Structures and Buildings Allowance)
- R&D tax credit eligibility review and claim preparation
- EIS / SEIS structuring for incoming investment
- Capital Gains Tax planning ahead of company sale or shareholding restructure
- Inheritance tax planning on shares and property held inside a company
A good fit if you're one of these.
Owner-directors of profitable Harrow limited companies (£75k+ profit)
Sole traders earning above the £100k personal-allowance taper
Companies considering investment, sale, restructure, or succession
Property investors with multiple properties or complex ownership
Founders preparing for an exit event in the next 1-3 years
We don't publish fixed £/month tables, and here's why.
Tax planning is usually project-based, not retainer. A single-director PSC review might be a few hours' work; a pre-sale planning engagement on a £3m company can run into significant double-digit hours. Most accountants in our network quote a fixed fee per planning engagement after an initial scoping conversation. The value is almost always many multiples of the fee — but only if the engagement is properly scoped first.
Questions we actually get asked.
Is tax planning the same as tax avoidance?
How early should I start planning before a sale?
Can the same accountant handle planning and the routine work?
What's the typical fee for a tax-planning engagement?
Do I need to be wealthy or have a complex business to benefit?
Often paired with tax planning.
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