Christopher R Brown Ltd

Dividend tax went up again in April. Have you rebalanced?

From 6 April 2026, the basic rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. Only the 39.35% additional rate stayed the same. If you're a director-shareholder taking dividends, your tax bill just went up.

The dividend allowance is still only £500.

What to review now:
- Your salary vs dividends mix for 2026/27
- Whether pension contributions could reduce your overall tax bill more efficiently
- If you have a spouse or civil partner as a shareholder, whether dividend splitting still makes sense at the new rates
- Whether retained profits in the company might be a better strategy

The higher dividend tax rates are another step in the gradual narrowing of the gap between sole trader and limited company taxation. But limited companies can still be significantly more efficient - especially when pension contributions and retained profits are part of the plan.

Speak to us before the end of July to make sure your 2026/27 extraction strategy is right.

P11Ds are gone - benefits in kind are now through payroll.

From April 2026, HMRC made it mandatory to report most benefits in kind through your payroll software in real time - rather than filing a year-end P11D form. This is a significant change to how company cars, health insurance, gym memberships and other perks are taxed.

What it means for you:
- Benefits must be reported through payroll as they're provided - not at year end
- Income Tax and Class 1A NICs are collected throughout the year
- Employees no longer claim homeworking relief via their tax code (employers reimburse via payroll instead)
- Certain employer-funded health benefits and eye tests are now tax-exempt when processed through payroll

If you're still running your payroll the old way, this is a wake-up call. Outdated software or manual processes will cause errors and potential HMRC penalties.

We can review your current payroll setup and make sure you're fully compliant.

Thinking of incorporating? The rules on Incorporation Relief just changed.

If you're a sole trader or partnership considering moving into a limited company, there's something important you need to know. Incorporation Relief - which allows you to transfer your business without an immediate Capital Gains Tax bill - changed on 6 April 2026.

The relief itself hasn't been removed. You can still defer CGT when you transfer your business to a limited company in exchange for shares. But how you claim it and the conditions around it have shifted following the 2025 Budget announcement.

If you've been putting off incorporation, the time to act and get proper advice is now - not in a rush at the end of the tax year.

What you'll need to consider:
- The value of goodwill and assets being transferred
- Whether full business integration relief conditions are met
- How shares are structured on incorporation
- Whether the timing works in your favour

This is one area where the wrong decision can cost thousands. Get specialist advice before you act.