Tax Planning Strategies for Business Owners

Tax Planning Strategies for Business Owners

As a business owner, you’re no stranger to juggling responsibilities — from operations and payroll to long-term growth. But how often do you review your personal and business tax planning strategy?

Effective tax planning isn’t about last-minute decisions in October or at the end of your company tax year. It’s about structuring your affairs in a smart, compliant way — so you retain more of your profits, build personal wealth, and future-proof your business.

Here are some tax planning strategies every business owner should consider:

1. Maximise Your Pension Contributions
Pension contributions remain one of the most tax-efficient ways to extract money from your business.

• Contributions are deductible against corporation tax
• Directors can contribute personally via AVCs (with tax relief up to 40%)
• Retail Master Trusts or PRSA’s allow flexibility and substantial funding over time
• Don’t forget: tax relief is age-dependent — up to 40% of earnings after age 60

→ Consider topping up before year-end and aligning contributions with your cash flow.

2. Use Company Funds for Life Cover
If you’re paying for life cover or income protection personally, stop.

A company-paid Executive Income Protection plan or Section 785 life cover policy can be tax-deductible to the business — offering the same protection at a lower net cost.

3. Review Director’s Salary & Dividends
What’s the best mix of salary and dividends? It depends on:

• Your PRSI/USC profile
• Desired pensionable income
• Cashflow needs and thresholds

A small tweak in how you draw income could yield meaningful tax savings over the year.

4. Make Use of the Small Benefit Exemption
You can give yourself (and each employee) up to €1,500 per year tax-free via gift cards or vouchers — completely deductible and not subject to PAYE, PRSI or USC.

→ It’s a simple way to reward yourself or staff while reducing your tax bill.

5. Think About your Exit Strategy Early
Whether you plan to sell your business, wind down, or transfer to family, tax planning should start years in advance.

• Retirement Relief and Entrepreneur Relief can help reduce or eliminate CGT
• Your company structure (e.g. shareholding, holding company) affects eligibility
• A poorly planned exit can cost tens of thousands in tax — or worse, block reliefs

→ A well-timed valuation and re-structure could save you serious money in the long term.

6. Track Personal vs Business Expenses
Are you maximising your business costs?

• Mobile, broadband, home office
• Mileage (if not using company car)
• Professional fees, subscriptions, CPD
• Director’s annual health check (yes, it can be deductible)

Even small recurring costs add up and by reviewing your costs currently savings can be made.

7. Stay Ahead of Auto Enrolment
The government’s My Future Fund auto enrolment pension system is coming in January 2026.

If you already offer a pension scheme to staff, it may be time to review its competitiveness. If you don’t, this is your opportunity to shape a tax-smart, retention-friendly benefits package.

In summary, Tax planning isn’t just about compliance — it’s about maximising what you keep while staying in control of your finances.

At U Consulting, we specialise in helping business owners create tailored tax and wealth strategies that work today — and tomorrow.

Seek out a Certified Financial Planner CFP® or contact us on info@uconsulting.ie if you would like to find out more information or discuss a no obligation review of your current situation.

All information and views contained within this article is for informational purposes only and the views expressed do not constitute financial advice.  U Consulting makes no representations as to the accuracy, completeness or suitability of any information and will not be liable for any errors, omissions or any losses arising from its use.  Please consult a professional financial advisor before making any financial decision.

Transform your financial life

Author – Brian Flanagan