Running a limited company as a sole director gives you control, flexibility, and strong tax planning opportunities. But it also comes with responsibility. As we move closer to 2026, relying on outdated advice or a set-and-forget approach can quietly cost you money.

Tax rules evolve, thresholds shift, and what worked last year may not be optimal next year. A good accountant does more than file returns. They help you make informed decisions before problems arise.

If you are a sole director, these are the three most important questions you should be asking your accountant before 2026.

1. How should I take money out of my limited company?

This is the most common and most important question for sole directors.

Many directors assume that once they have found the “best” salary and dividend mix, it never needs changing. That assumption is costly. The most tax-efficient way to extract income depends on tax bands, dividend allowances, National Insurance thresholds, and your personal circumstances.

For many sole directors with no other income and no additional employees or directors, a common starting structure for 2026/27 may look like:

• Salary around the personal allowance level
• Dividends taken within the basic rate band
  

This approach typically keeps income tax and National Insurance efficient. However, it is not a universal solution.

Your optimal strategy may change if:

• You have other sources of income
• Dividend tax rates are adjusted
• You plan to apply for a mortgage
• You want to increase pension contributions
• You are approaching higher tax bands
  

A proactive accountant should review this every year, not reuse last year’s figures. Before 2026, you should be confident that your pay structure still aligns with current rules and your future plans.

2. What should I do with excess profits in my company?

After paying yourself sensibly, many sole directors are left with surplus cash in their company. Leaving money idle in the business is not always a neutral decision.

Excess profits can be used strategically, but only if you understand the options and consequences.

Depending on your goals, surplus cash can be:

• Contributed to a pension in a highly tax-efficient way
• Retained to support growth or provide stability
• Used to repay director’s loans
• Invested in assets that support the business
• Extracted gradually over time to manage tax exposure
• Used as capital to start up a new business e.g. property holding business.
• Transferred to a business savings account to earn interest .
  

Each option affects corporation tax, personal tax, and long-term wealth differently. The right choice depends on whether you are focused on growth, retirement planning, or future exit.

A good accountant should not simply say “leave it in the company.” They should explain the impact of each option and help you decide what fits your plans beyond 2026.

3. How can I reduce corporation tax in a HMRC compliant manner?

This question is often misunderstood. Tax reduction does not mean risky schemes or shortcuts. It means fully using what the rules already allow.

Many sole directors overpay corporation tax simply because allowable reliefs and benefits are not used correctly or not used at all.

Examples of legitimate tax-efficient planning include:

• Claiming expenses that are wholly and exclusively for the business
• Using trivial benefits correctly
• Structuring staff parties within permitted limits
• Providing eye tests where relevant
• Considering electric company cars when appropriate
• Reviewing relevant life insurance options
  

None of these are aggressive strategies. They are established, compliant, and widely accepted by HMRC when applied correctly.

The key word is compliance. Poor advice or incorrect claims can create risk instead of savings. Your accountant should explain what applies to your business and document everything clearly.

Before 2026, you should know exactly which allowances you are using and which ones you are missing.

Why asking these questions now matters

Too many sole directors only speak to their accountant after the year has ended. At that point, most decisions are already locked in.

Real tax efficiency happens before the year closes, not after the return is filed.

As 2026 approaches, reviewing your structure early gives you:

• Time to adjust pay and dividends
• Better use of pension planning
• Clear visibility on corporation tax exposure
• Confidence that your business is compliant and efficient
  

If your accountant cannot answer these questions clearly, or has not raised them proactively, it may be time for a more strategic approach.

How HMR Accountancy supports sole directors

At HMR Accountancy, we work closely as an accountant for sole directors UK, supporting owner-managed businesses that want clarity, not confusion when it comes to tax, compliance, and forward planning.

Our focus goes beyond compliance. We help you:

• Structure income efficiently
• Plan ahead for tax changes
• Make informed decisions with excess profits
• Reduce tax within the rules, not around them
  

If you want to enter 2026 with a clear plan rather than uncertainty, now is the right time to review your setup.