I’ll bring you through a few pre-year-end tax planning tips. I was going to call this blog “A few bob for Christmas”, but I put that into Google, and various “bob” hairdos came up. However, the idea behind this is to either pay yourselves a few bob or save a few bob. Let’s look at
- Expenses
- Vouchers
- Pensions
- Max lower rate bands
- BIK
- Incorporation
Expenses
When I think of expenses now, three letters come to mind. ERR. The RR stands for Reporting Requirement. You must report to Revenue before you pay. The other key part of this is having the correct expense claim forms in place. When there are two company directors, the other director should sign your expense claim. Often, employees and directors will build up their expenses during the year. This is with a view to getting payment in December when the outgoings are higher.
Revenue introduced ERR in 2024, and there was some leeway with no fines and penalties that year. In 2025, the gloves are off, and Revenue expects full compliance with ERR. The reportable expenses are
- Travel and subsistence
- Remote Working Daily Allowance and
- Vouchers
Paperwork is key
The right paperwork is key. And the numbers must add up too! Be careful to make sure you are using the correct mileage and subsistence rates. Travelling from home to the office and back again is private mileage, and Revenue won’t allow a claim for that.
In the event of any PAYE review, the first thing that Revenue will ask for is copies of your expense claims. If you don’t have them, you’re in bother.
The remote working daily allowance is €3.20 per day. It is usually more beneficial to claim this than to claim the light, heat and broadband bills in your tax return.
Vouchers
For 2025, you can reward employees or directors with up to 5 vouchers with a cumulative value of no more than €1500. If you haven’t given any vouchers yet in 2025, then you can give from one to 5 vouchers at Christmas. There are loads of providers out there, and you’ll hear the ads for
- Local chamber vouchers
- Clevercards
- Allgo
- All for one or is it one for all?
- Supermarket vouchers
This gives you up to €1500 of vouchers to spend. If you like to travel, the company could buy you a Ryanair or an Aer Lingus voucher. This is a no-brainer. To get €1500 in cash, it would be €3000 of salary for a high-rate taxpayer. It’s not something to carry into 2026. You either use it or lose it. And don’t forget to include the voucher in your payroll to meet the ERR rules.
A sole trader can’t pay himself a voucher and get a tax deduction for it. In the hands of a sole trader, that is drawings, and it isn’t a tax-deductible expense. But if that sole trader has employees, he/she could give vouchers to them and get a tax deduction for those.
Pensions
Let’s be honest. Pensions are sexy. They are even more sexy for younger people. The sooner you start, the more money you’ll have when you’re your parents’ age. For company owners, pensions are the sexiest thing alive. If you don’t have one, you’re mad. It’s time to take one out. For those of you who do, a top-up could be on the cards.
Working company owners will either have a PRSA or a normal company pension scheme. The amount you can put in varies between the types of schemes. For those of you in a PRSA, you can’t put in more than 100% of your salary. If you do, there are BIK implications. You’ll get the tax relief on lump sum contributions, but you may not get it all in one year.
As a rule of thumb, you look at your normal monthly/annual contributions. Say, Pat’s company, Pat the plumber Ltd, pays €2,000 a month into Pat’s pension. Before the end of 2025, the company will make a lump sum payment of €24,000. The company will get full tax relief on the special contribution in 2025. And Pat will have €48,000 in his pension pot, all paid by his company.
Think 20 years of those payments, and Pat will have a pension of well north of €1 million when he retires. He can get 25% of the final pension pot as a lump sum with a max of €200k tax-free. Plus, if the worst happens to Pat after retiring, the pension pot can go tax-free to his spouse.
Max out lower rate bands
To max out the lower rate band in 2025, you are looking at salaries of
| Personal circumstances | 2025 € |
| Single or widowed | €44,000 @20% balance @40% |
| Single or widowed, qualifying for single person child carer credit | €48,000 @20% balance @40% |
| Married (one spouse with income) | €53,000 @20% balance @40% |
| Married (both spouses with income) | €53,000 @20% (with an increase of €35,000 max) balance @40% |
You’ll see that the most a married couple can earn at the lower rate is €88,000. Of that, the most that one spouse can earn at the lower rate is €53,000. If the other spouse earns €32,000, the combined lower rate is €85,000. That means the lower-earning spouse can earn another €3,000 in 2025 to max the lower rate band.
An extra €3,000 could go into the December payroll. If you don’t get to this in 2025, then a proprietary director could take a bonus of €3,000 in the first 6 months of 2026, assuming a 31 December accounting year-end. The owner-director would include the bonus in their 2025 Form 11 as it was earned in 2025.
It makes perfect sense to max out the lower rate bands once the funds are in the company to cover the salaries. There will also be some PRSI & USC costs. PRSI is good as you’ll get the benefit down the line with the State pension and other benefits. As for the USC. That’s just another tax. But with tax credits, your effective tax rate could even be lower than 20%. The company will get a deduction for your salary at 12.5%, so the net cost is only 7.5%
If you have a professional services company, then the cost is neutral. The effective CT rate, with the professional services surcharge, is close to 20%.
BIK
December and January are the usual months of the year when your gym or club membership is due for renewal. Rather than you paying this from your net salary, your company could pay this for you. Pat, of Pat the Plumber Ltd, loves playing golf. His golf membership for Dolally Golf Club is due in December 2025. The lads have put it up to €2,000. He can’t wait until the AGM to give out about this!
Assuming Pat is on the higher tax rate. He would have to earn €4,000 to leave him with a net €2,000 to pay the membership. If his company pays the membership the cost will be €3,000. That is the €2,000 payment from the company to the golf club. Plus, Pat will be liable to BIK on the membership of €2,000. Assuming a tax rate of 50% the cost to him is €1,000.
The paperwork should be right in this situation. The invoice for the membership should be in the name of the company and not Pat’s name.
Incorporation
This is more for those of you who are sole traders or trading in partnerships. An idea to think about over the Christmas holidays. If you’re a sole trader and your profits are increasing, your tax liabilities will be climbing too. Transferring your trade to a limited company, called incorporation, can save you taxes. And large amounts over a long period of time. Think a 12.5% tax rate on profits and not 55%.
If your business has employees and a long trading history, then you may have built up goodwill. You can transfer this goodwill to the company along with the trade and other trading assets. This transfer of assets would be liable to Capital Gains Tax at 33%. However, a lower rate of CGT, like the 10% rate or no CGT at all, could apply to the transfer. The major benefit here is that the company would owe you the value of the assets transferred. You can get this money tax-free from your company.
These scenarios are very much on a case-by-case basis, and careful planning is advisable.
Summary
We love helping our clients become as tax-efficient as possible. The above are a sample of pre-year-end planning tips that will put a few bob into your pocket. Whether that is to hold onto more of the money you have or to boost your wealth over the long haul. The idea is to do this while remaining on the right side of Revenue. You want to be tax-efficient, but it will pay you to do things right. If you’re in a company, why would you bother taking chances to save 12.5% tax? It’s an amazingly brilliant rate.
In 2026, we’d love to help your growing business become as tax-efficient as possible.
Are you looking for you and your business to be more tax-efficient in 2026? If so, start here
