Month: May 2026

How capital gains are linked with Income Tax

How capital gains are linked with Income Tax is important to understand as your overall income position affects the Capital Gains Tax (CGT) rate you pay.

CGT interacts directly with your Income Tax band. Your taxable income is first calculated after deducting your Personal Allowance and any Income Tax reliefs. Your chargeable capital gains are then added on top, after subtracting the annual tax-free CGT allowance (2026-27: £3,000). This determines whether your gains fall within the basic or higher rate Income Tax band, which determines the CGT rate that applies.

For individuals in the higher or additional rate Income Tax band, capital gains are usually taxed at 24% from 6 April 2026. Basic rate taxpayers will initially pay CGT at a rate of 18% but this increases to 24% for any amount of chargeable gain above the basic Income Tax band.

Gains on certain assets are treated differently. Gains on business assets may qualify for Business Asset Disposal Relief at a rate of 18% and most people do not pay CGT when selling their main home. Trustees and personal representatives typically pay a flat 24% CGT rate.

Source:HM Revenue & Customs | 04-05-2026

How dividends are taxed

Dividends are taxed differently from other types of income, with separate allowances and tax rates that depend on your overall level of income. You do not pay tax on dividends that fall within your Personal Allowance (2026-27: £12,570), and there is also a separate tax-free dividend allowance of £500 each year. Any dividend income above these allowances is taxable.

The rate of tax you pay on dividends depends on your Income Tax band.

For the 2026–27 tax year, the rates are:

  • Basic rate: 10.75%
  • Higher rate: 35.75%
  • Additional rate: 39.35%

To determine which rate applies, your dividend income is added to your other income. This means dividends can push you into a higher tax band and / or can be taxed across more than one rate.

If you receive up to £10,000 in dividends you can ask HMRC to change your tax code and the tax due will be taken from your wages or pension, or you can enter the dividends on your self-assessment tax return, if you already fill one in. You do not need to notify HMRC if the dividends you receive are within your dividend allowance for the tax year.

If you have received over £10,000 in dividends, you will need to complete a self-assessment tax return. If you do not usually send a tax return, you need to register by 5 October following the tax year in which you received the relevant dividend income.

Source:HM Revenue & Customs | 04-05-2026

The 60% tax band

Many taxpayers are surprised to learn that once their income exceeds £100,000, they can face an effective tax rate of 60%, although officially, no such rate appears to exist. This happens when the personal allowance (currently £12,570) is gradually withdrawn once adjusted net income goes above £100,000.

Under the tax rules, if a taxpayer earns over £100,000 in any tax year, their personal allowance is gradually reduced by £1 for every £2 of adjusted net income exceeding £100,000. This ceiling applies regardless of age, meaning that any taxable receipt that pushes their income above this threshold will lead to a reduction in their personal tax allowance.

This is best demonstrated by way of an example. If a taxpayer earns exactly £100,000 they would usually benefit from the full personal allowance. However, if their income increases by £1,000 to £101,000 then:

  • £1,000 is taxed at 40% = £400
  • Their personal allowance is reduced by £500
  • That £500 is now also taxed at 40% = £200

Total tax on the extra £1,000 = £600, creating an effective tax rate of 60%.

This continues until adjusted net income reaches £125,140, at which point the personal allowance is fully withdrawn.

Adjusted net income refers broadly to a taxpayer’s total taxable income before personal allowances, minus certain tax reliefs such as trading losses, charitable donations, and pension contributions.

Affected taxpayers should consider financial planning strategies to avoid this personal allowance trap. Reducing income below £100,000 could be achieved through options such as increasing pension contributions, making charitable donations, or participating in certain investment schemes.

Source:HM Revenue & Customs | 04-05-2026

Tax Diary June/July 2026

1 June 2026 – Due date for corporation tax due for the year ended 31 August 2025.

19 June 2026 – PAYE and NIC deductions due for month ended 5 June 2026. (If you pay your tax electronically the due date is 22 June 2026).

19 June 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2026. 

19 June 2026 – CIS tax deducted for the month ended 5 June 2026 is payable by today.

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.

19 July 2026 – Pay Class 1A NICs (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.

Source:HM Revenue & Customs | 06-05-2026

A pattern of workplace harassment may be treated as a continuous event

A pivotal ruling has raised a protective umbrella over those impacted by a toxic workplace environment, potentially extending employers' legal liability by months or even years.

An Employment Tribunal had to decide whether the employers of a harassed employee, who was actively considering a change of employment, could use this intention to leave as a pretext to slash their compensation. An employee of the British Council was posted to Morocco in October 2018, where she was subjected to a campaign of sustained harassment by a colleague, culminating in her filing a grievance. However, the report blamed her for “sending mixed messages,” romanticising the offender’s behaviour as that of a "spurned lover". Thus, the British Council refused to uphold her sexual harassment claims, despite actual evidence of physical assault. She resigned and presented her claims to an Employment Tribunal for constructive unfair dismissal, direct sex discrimination, sexual harassment, and victimisation.

The first Tribunal upheld all the claims, save that of victimisation, finding multiple repudiatory breaches of the implied term of trust and confidence, plus discriminatory conduct for which the British Council was vicariously liable. However, the first Tribunal applied a 35% Polkey reduction to the unfair dismissal compensation and a 35% Chagger reduction to discrimination compensation (based on the possibility that the appellant might have left her employment with a reduced benefits package, plus evidence that she was contemplating a move to other roles). She appealed the deductions, leading the British Council to cross-appeal, contending that the sexual harassment claim was ‘out of time’.

The Appeal Tribunal allowed the appeal on the Chagger deduction, as the victim’s urge to leave was influenced by the very harassment she had suffered, while the 35% Polkey deduction from discrimination compensation could not stand. The Appeal Tribunal also dismissed the British Council's cross-appeal, finding that the sexual harassment was part of a continuous pattern of discrimination.

This ruling upholds the notion that "career intentions" do not take place in an ivory tower. Thus, any compensation awarded should reflect a hypothetically successful career, given sufficient dignity and protection from harassment. Crucially, the "limitation period" for such a claim does not necessarily reset after every individual act of harassment. If a company handles a grievance poorly or tacitly permits a "climate" of harassment to persist, then it effectively creates a single, continuous legal event, one which allows a claimant to sue for historical misconduct. Thus, employers, especially in light of the recent advent of the

Employment Rights Act, must act swiftly to nip all such behaviours in the bud to prevent them from potentially escalating into a weighty compensation claim.

Source:Tribunal | 05-05-2026

Non-tax considerations when returning to the UK

Returning to the UK after a period abroad can feel straightforward on the surface, but there are a number of practical and personal matters that need careful thought to ensure a smooth transition.

Housing and accommodation

One of the first issues to address is where you will live. If you have sold or rented out your previous home, you may need to arrange temporary accommodation while securing a long term property. Mortgage availability can depend on your employment status and recent credit history, which may be limited if you have been overseas.

Employment and income stability

If you are returning without a confirmed role, it is important to consider how quickly you can re-enter the UK job market. Recruitment processes, recognition of overseas experience, and changes in your industry can all affect how easily you secure employment. For business owners, re-establishing trading activity or building a new client base may take time.

Healthcare access

Access to healthcare is another key consideration. While the UK offers public healthcare through the NHS, you may need to register with a GP and there can be waiting times before routine services are available. If you have ongoing medical needs, planning continuity of care is essential.

Education and schooling

For families, schooling can be a major factor. Availability of school places varies by area, and application deadlines may have passed while you were abroad. It is often worth researching options well in advance and considering temporary arrangements if necessary.

Financial and administrative matters

You may also need to re-establish UK banking, update identification documents, and ensure your driving licence and insurance arrangements are valid. Credit history may need to be rebuilt, which can affect access to finance in the short term.

A planned approach to these practical issues can make the return to the UK far less disruptive and help you settle back into day to day life more quickly.

Source:Other | 03-05-2026

Update on Companies House plans for profit and loss filing

There has been considerable discussion over the past year about whether small companies would be required to file profit and loss accounts at Companies House. Many practitioners will be aware that proposals were introduced under the Economic Crime and Corporate Transparency Act 2023 which signalled a move towards greater transparency in company reporting.

Under those proposals, small companies and micro-entities would have been required to include a profit and loss account in the version of their accounts filed at Companies House. This would have marked a significant departure from the current position, where businesses can file reduced, or “filleted”, accounts that exclude detailed profit information from the public record.

However, in a recent development, the government has confirmed that these changes have been paused. Updates published via GOV.UK indicate that the planned implementation timetable will not proceed as expected, and that the reforms are now under review. Importantly, no revised date for introducing mandatory profit and loss filing has been announced.

For now, this means that the existing rules remain in place. Small companies and micro-entities can continue to file accounts without a profit and loss statement being made publicly available, although full accounts must still be prepared for shareholders and, where relevant, lenders.

While this announcement will be welcomed by many smaller businesses concerned about the disclosure of commercially sensitive information, it should be viewed as a pause rather than a permanent change in direction. The broader policy objective of increasing corporate transparency remains, and it is likely that similar proposals will re-emerge in the future.

Source:Other | 03-05-2026
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