Welcome to our July newsletter. As we move into the second half of the year, now is an ideal time to review your tax and financial position and ensure you remain on track to meet your obligations while making the most of available reliefs and allowances. In this issue, we look at the High Income Child Benefit Charge and recent changes affecting eligible families, explore the qualifying conditions for Research & Development tax relief, explain the rules surrounding salaried members of LLPs, and provide an overview of dividend taxation for the 2026-27 tax year. We also include key tax dates for July and August to help you stay organised and compliant.
Families claiming Child Benefit should be aware of the High Income Child Benefit Charge (HICBC), which can apply when one member of the household has a higher income.
The charge applies where an individual has adjusted net income of more than £60,000 in a tax year and either they or their partner receives a Child Benefit payment. The amount payable increases gradually as income rises, with the charge set at 1% of the Child Benefit received for every £200 of income above £60,000.
As a result, the impact of the charge is phased in rather than applying all at once. However, once income reaches £80,000, the charge effectively claws back all of the Child Benefit received, removing the direct financial benefit of the payments.
Eligible taxpayers can elect to have the charge collected through their PAYE tax code rather than completing a self-assessment tax return. This measure is intended to reduce the administrative burden for employees whose only reason for filing a self-assessment tax return is to declare the HICBC.
Although some families choose to stop receiving Child Benefit to avoid the charge, it is often worthwhile to continue making a claim. Registering for Child Benefit can help protect entitlement to National Insurance credits for parents or carers and ensures children are automatically issued with a National Insurance number shortly before their 16th birthday.
Taxpayers with income approaching or exceeding £60,000 should review their position regularly to ensure they are complying with the rules and making the most appropriate choice for their circumstances.
Research and Development (R&D) tax relief is designed to support companies that invest in innovation and seek to make advances in science or technology. The scheme offers businesses the ability to invest in new technologies and scientific development in exchange for generous tax reliefs. However, not every project will qualify, and businesses should carefully consider whether their activities meet HMRC’s requirements before making a claim.
Only companies’ chargeable to UK Corporation Tax can qualify for R&D relief. In addition, the company must be undertaking a project that aims to achieve an advance in a field of science or technology.
For tax purposes, the requirements that must be met for R&D to qualify for relief include creating new processes, products or services, making appreciable improvements to existing ones and even using science and technology to duplicate existing processes in a new way. R&D activities can qualify for tax relief even if the project in question failed and both profitable and loss-making companies can benefit from making a claim.
The advance must go beyond simply improving processes or products for the business itself and should contribute to overall knowledge or capability in the relevant field. Since April 2023, mathematical advances can also qualify as scientific advances for R&D tax purposes.
Businesses should keep clear records of the uncertainties faced, the work undertaken to resolve them, and the successes and failures encountered during the project. Once eligibility has been established, the next step is to identify the qualifying expenditure that can be included in an R&D relief claim.
Members of a Limited Liability Partnership (LLP) are normally treated as self-employed for tax purposes. However, special rules can apply where a member's terms of membership are more akin to the terms of an employee than a partner in a traditional partnership. These are known as salaried members.
The legislation applies a three-part test. A member will be treated as a salaried member for tax purposes only if all three conditions are met:
To fall within the salaried member rules, an individual must perform services for the LLP in their capacity as a member. Some LLPs will strive to ensure that at least one of the conditions set out above does not apply to ensure these rules do not apply.
In addition, the rules do not apply to:
Understanding dividend tax is important for anyone who receives income from shares in a company. Dividends are taxed differently from salary, pensions and other forms of income, with their own allowances and tax rates.
For the 2026-27 tax year, individuals do not pay tax on dividend income that falls within their Personal Allowance of £12,570. In addition, there is a separate dividend allowance of £500. Dividend income received above these allowances is generally subject to tax.
The rate of tax payable depends on the individual's overall level of taxable income. For 2026-27, dividends falling within the basic rate band are taxed at 10.75%, those within the higher rate band at 35.75% and those within the additional rate band at 39.35%.
To determine the applicable rate, dividend income is added to other sources of taxable income. As a result, dividends can push an individual into a higher tax band, and different portions of the dividend income may be taxed at different rates.
Where total dividend income is £10,000 or less, an individual may ask HMRC to adjust their tax code so that any tax due is collected through their wages or pension.
Alternatively, the income can be reported through a self-assessment tax return. There is normally no requirement to notify HMRC where dividend income is covered entirely by the dividend allowance.
Individuals who receive more than £10,000 in dividends must complete a self-assessment tax return. Those who do not normally file a return must register with HMRC by 5 October following the end of the tax year in which the dividend income was received.
1 July 2026 - Due date for corporation tax due for the year ended 30 September 2025.
6 July 2026 - Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs for 2025-26.
19 July 2026 - Pay Class 1A NICs for 2025-26 (by the 22 July 2026 if paid electronically).
19 July 2026 - PAYE and NIC deductions due for month ended 5 July 2026. (If you pay your tax electronically the due date is 22 July 2026).
19 July 2026 - Filing deadline for the CIS300 monthly return for the month ended 5 July 2026.
19 July 2026 - CIS tax deducted for the month ended 5 July 2026 is payable by today.
1 August 2026 - Due date for corporation tax due for the year ended 31 October 2025.
19 August 2026 - PAYE and NIC deductions due for month ended 5 August 2026. (If you pay your tax electronically the due date is 22 August 2026)
19 August 2026 - Filing deadline for the CIS300 monthly return for the month ended 5 August 2026.
19 August 2026 - CIS tax deducted for the month ended 5 August 2026 is payable by today.