Introduction
If there’s one thing construction directors dread, it’s the unexpected tax bill that arrives when it’s far too late to do anything about it. Too many firms only find out their liability once the year has ended, leaving no chance to plan, save, or reduce the burden.
This is where Month-9 tax planning comes in. By reviewing your finances three-quarters of the way through the year, you gain clarity on your likely tax position before the year closes. That means you can take action – whether that’s setting aside funds, making strategic investments, or restructuring director remuneration.
For construction businesses, where cash flow is already complicated by staged invoicing, subcontractor costs, and retention payments, Month-9 planning isn’t just helpful – it’s essential.
At Accounting Matters, we’ve built our reputation on being proactive, not reactive. We sit down with our construction clients at Month-9 to forecast tax, identify savings, and stop nasty surprises. This blog explains why Month-9 reviews are so valuable, what they cover, and how they can transform the way construction firms manage their finances.
Why Construction Businesses Face Unique Tax Challenges
Construction companies don’t operate like most businesses. Cash doesn’t flow in smoothly – it comes in bursts, often after significant outlays. This creates several challenges for tax planning:
- Retention payments: Clients may hold back 5–10% of project costs for months, even years. On paper, you’ve earned the income, but in reality, you don’t have the cash. HMRC, however, doesn’t care – your tax is based on accounting profit, not whether you’ve been paid in full.
- Subcontractor payments: CIS deductions complicate cash flow. Contractors might deduct tax from your payments, leaving you with less cash in hand but still facing liabilities. Reconciling these correctly is key to avoiding overpayment or underpayment.
- Irregular projects: A big job one month, then little income the next. Tax planning based on averages won’t work. Each year can look very different depending on contract timings.
- Capital-intensive spending: Construction firms often invest in machinery, vehicles, or tools. Without planning, you may miss opportunities to claim capital allowances or spread relief efficiently.
- Director remuneration: Many directors pay themselves through a mix of salary and dividends. Getting the balance right can make a huge difference – but only if you plan ahead.
All of these factors make Month-9 reviews particularly powerful. Instead of waiting until year-end when it’s too late, you take control early.
What is Month-9 Tax Planning?
Month-9 tax planning is a mid-year review carried out after nine months of trading. The idea is simple: look at your financial results to date, project forward for the final quarter, and forecast your year-end tax position.
It gives construction businesses:
- Visibility: You know what your likely corporation tax bill will be before it lands.
- Time to act: With three months left in the year, there’s still scope to adjust.
- Peace of mind: No more nasty surprises.
The process usually includes:
- Reviewing management accounts (up-to-date bookkeeping is vital).
- Forecasting income and costs for the remaining three months.
- Calculating projected taxable profit and corporation tax.
- Identifying opportunities to reduce liability (e.g. capital purchases, pension contributions, R&D claims).
- Advising directors on salary/dividend planning.
- Reviewing VAT, PAYE, and CIS positions to make sure all is reconciled.
At Accounting Matters, we sit down with clients to explain everything in plain English. We don’t just give you a number – we give you a plan.
The Benefits of Month-9 Planning for Construction Firms
So why does Month-9 matter so much for construction?
- Cash flow management: Construction firms live and die by cash flow. Knowing your tax bill in advance means you can set aside funds gradually instead of scrambling at year-end.
- Tax saving opportunities: Many reliefs and allowances must be actioned before year-end. A Month-9 review gives time to act – whether that’s buying equipment, making pension contributions, or claiming R&D.
- Avoiding surprises: There’s nothing worse than a tax bill you didn’t expect. For construction firms, which already deal with unpredictable payment cycles, certainty is invaluable.
- Better decision-making: Thinking of hiring more staff? Buying new machinery? Expanding into a new site? A Month-9 review gives you the numbers you need to make informed choices.
- Director remuneration planning: Getting the salary/dividend mix right can reduce tax. But the decision needs to be made before the year closes.
- Confidence with HMRC: No more last-minute scrambles or late payments. Month-9 keeps you one step ahead.
In short: Month-9 planning isn’t just about tax. It’s about running your construction business with confidence.
Month-9 in Action: A Practical Example
Let’s say “BuildRight Ltd” (fictional example) has a March year-end. In December, at Month-9, we review their accounts.
- So far, profits are £120,000.
- Forecasting the final quarter, we project year-end profits at £160,000.
- Corporation tax liability is likely to be around £40,000.
The director admits they hadn’t set aside nearly enough to cover it. But because we’ve caught it at Month-9, they still have time to prepare.
We also identify opportunities:
- They need a new van, which qualifies for capital allowances. By purchasing before year-end, taxable profit drops to £145,000 – reducing tax by around £3,000.
- The director hasn’t optimised their salary/dividend split. We recommend adjustments that save another £2,000.
- The firm carried out innovative work on insulation methods, which may qualify for R&D relief. We begin preparing a claim worth £10,000.
By the end of the review, the projected £40,000 tax bill has dropped to £25,000. More importantly, the director has three months to set funds aside, rather than being blindsided in September.
This is the power of Month-9.
Tax Reliefs and Strategies to Consider at Month-9
Here are some of the main areas we review with construction clients at Month-9:
- Capital allowances: If you’re planning to buy equipment, vehicles, or tools, doing so before year-end can reduce taxable profits.
- R&D tax relief: Construction firms often innovate with materials, processes, or techniques. Many don’t realise this qualifies as R&D. Claims can be substantial.
- Pension contributions: Company pension payments are tax-deductible. Month-9 gives time to make contributions before year-end.
- Loss relief planning: If you’ve had a bad year, you may be able to carry losses back or forward to reduce tax.
- Bad debt provisions: Construction firms often face slow-paying clients. Making provisions for irrecoverable debts can reduce taxable profit.
- Director remuneration: Reviewing the balance of salary and dividends ensures efficiency. Too late after year-end and options disappear.
- VAT and CIS: Making sure both are reconciled properly avoids problems later.
Each construction firm is different, but the principle is the same: Month-9 gives you time to make smart moves.
Case Study: How Month-9 Saved a Contractor Thousands
“GreenBuild Contractors” (fictional example) had never done a Month-9 review. They would wait until accounts were prepared after year-end, then get hit with a tax bill they couldn’t reduce.
In their first Month-9 with Accounting Matters, we identified:
- A likely £50,000 tax bill.
- The chance to claim £15,000 in R&D relief for innovative eco-friendly methods.
- A director remuneration adjustment that saved £3,000.
- Opportunities to purchase equipment pre-year-end, saving another £2,500.
By the time we finished, their liability had dropped to £29,500 – and they had four months to prepare. The director said it was the first time they felt in control of tax rather than being caught off guard.
The lesson? It’s not just about numbers. It’s about confidence.
Why Accounting Matters is the Right Partner for Month-9 Planning
Not all accountants offer proactive Month-9 reviews. Many focus only on compliance – filing accounts and tax returns once the year is over. By then, it’s too late to make changes.
At Accounting Matters, we build Month-9 planning into our service for construction clients. We know the difference it makes. Our approach:
- Proactive – we schedule Month-9 reviews automatically.
- Sector-focused – we understand construction’s unique cash flow and CIS issues.
- Technology-driven – using Xero and forecasting tools to give real-time clarity.
- Straight-talking – no jargon, just clear advice on what you need to do.
- Results-oriented – our clients regularly save thousands through timely action.
Construction directors often tell us they sleep better at night after Month-9. That’s the peace of mind we aim to deliver.
Checklist: Preparing for Your Month-9 Review
To get the most from your Month-9 meeting, make sure:
- Your bookkeeping is up to date (invoices, receipts, bank reconciliations).
- CIS records are accurate and reconciled.
- Payroll is up to date and correctly processed.
- You have forecasts for projects due to finish in the next three months.
- You’ve noted any planned equipment purchases or director withdrawals.
The better the data, the more accurate the forecast. Month-9 works best when your numbers are current.
Conclusion & Call to Action
For construction businesses, tax shouldn’t be a guessing game. With so many moving parts – retention payments, subcontractors, equipment, irregular income – surprises are the last thing you need.
Month-9 tax planning is the key to taking control. It gives you clarity, time, and the opportunity to reduce your bill. It transforms tax from a shock into a strategy.
At Accounting Matters, we specialise in supporting construction firms through Month-9 and beyond. We help you forecast, plan, and act while there’s still time to make a difference. The result? Lower tax, better cash flow, and more confidence.
Ready to take control of your tax planning? Contact Accounting Matters today and discover how a Month-9 review can transform your business.