THE FINANCE FOLIO OCTOBER - ISSUE 33
GO FIGURE FINANCIAL EST. 2013
CONTENTS | OCTOBER 2026
OCTOBER - ISSUE 33
- 06 -
HOW TO SPOT BAD TAX ADVICE
- 09 -
UNDERSTAND YOUR P800 RECONCILIATION
-10 -
CHILD BENEFIT AND PAYING THE HICBC
-13-
PAYROLLING BENEFITS VOLUNTARILY IN 2027/28
-14 -
TAX REFUNDS FOR MORE THAN ONE TAX YEAR
-16 -
WITHDRAWAL OF CAPITAL FROM A BUSINESS – HAVE THE RULES CHANGED?
OCTOBER - ISSUE 33
The October Update Welcome to the October edition of The Finance Folio. As we move further through the 2026/27 tax year, this month’s issue covers a range of important updates and practical considerations for both business owners and individuals. Inside, we look at how to spot potentially misleading tax advice, understanding your P800 tax reconciliation, and the High Income Child Benefit Charge, including the option to pay the charge through PAYE. We also explore the changes to payrolling benefits from April 2027, the process for claiming tax refunds covering more than one tax year, and whether the rules surrounding the withdrawal of capital from a business have changed. These topics highlight some important considerations for both individuals and businesses when reviewing their tax position and planning ahead. We hope you find this edition informative, practical, and useful for planning ahead with confidence. As always, if you would like advice tailored to your circumstances, our team is here to help.
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How to spot bad tax advice HMRC have issued a warning that not all tax advice online is accurate. ‘Finfluencers’ (financial influencers) often present tax advice as ‘quick wins’ without covering the rules. This can be misleading as people may take action without being aware of the risks or whether the featured ‘win’ is appropriate to their circumstances. HMRC have published guidance to help people avoid being caught out by bad tax advice. Spotting tax avoidance Tax avoidance usually involves artificial transactions that serve no real purpose other than claiming falsely to reduce tax. Anyone involved in a tax avoidance scheme will have to pay the tax that they should have paid plus interest, and maybe penalties, so such schemes are best avoided. One way to prevent being caught up in a tax avoidance scheme is to understand how you are being paid. Check your contract and payslips to ensure you are paying the correct amount of tax and National Insurance. Warning signs that all is not well include receiving more money in your bank account than that shown on your payslip or receiving untaxed income, which may be described as a loan or a capital payment. Remember, you are responsible for paying the correct amount of tax, even if you appoint someone to handle your tax affairs. Anyone that thinks that they may be involved in a tax avoidance scheme is advised to contact HMRC as soon as possible.
Umbrella companies Contractors may be employed through an umbrella company. These are often used by recruitment agencies to pay temporary workers. The umbrella company employs and pays the worker but does not find the work – this is the role of the recruitment agency. To check that the umbrella company is not operating a tax avoidance scheme, the worker should check that they have paid the correct amount of tax and National Insurance. HMRC have a tool which can be used for this purpose which is available on the Gov.uk website. They should also check their payslip and be alert for signs of extra payments which may not have been taxed. Reporting a tax avoidance scheme Anyone that has been encouraged to get involved in a tax avoidance scheme, is aware of a tax avoidance scheme or knows of someone selling a tax avoidance scheme should report it to HMRC. Claiming expenses It is easy to get caught out by a tax refund company offering to make tax relief expense claims on your behalf in return for a fee. This might seem like an easy option. However, HMRC are keen to point out that it is easy to check whether you are eligible and to make a claim if you are. Doing it yourself means that you get to keep the full amount of any money that you are owed. The guidance explains when a claim can be made and how to make a claim with HMRC. Remember, if something sounds too good to be true, it probably is.
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Understand your P800 reconciliation HMRC send out a P800 tax calculation letter where a person who is employed and/or in receipt of a pension has overpaid or underpaid tax. They will not get a letter if they complete a Self-Assessment tax return instead; their Self-Assessment bill will be adjusted automatically. There are various reasons why a person may receive a letter, for example, because they were on the wrong tax code, they finished one job and started another in the same tax month, they started receiving a pension while they were still working or they received Employment and Support Allowance or Jobseeker’s Allowance. They may owe tax or be due a tax refund as a result. Claiming a refund Where the taxpayer is due a tax refund, the P800 letter will explain how to claim that refund. Where the letter states that the refund can be claimed online, the taxpayer can make the claim by visiting the Gov.uk website at www.gov.uk/tax-overpaymentsand-underpayments/if-youre-due-a-refund. Claims can also be made through the taxpayer’s personal tax account or the HMRC app or by contacting HMRC. Where a claim is made online, the refund should be received in five working days. If the tax calculation letter states that the taxpayer will get a cheque, they do not need to do anything – the cheque will normally be received within 14 days of the date on the P800 letter.
Owing tax If the P800 tax calculation letter says that the taxpayer owes tax, HMRC will usually collect this by amending the taxpayer’s tax code so as to collect the tax that is owed from the taxpayer’s wages in 12 equal instalments. This will happen automatically where the taxpayer pays tax under PAYE on employment income or a pension, their income exceeds their personal allowance by a sufficient amount to collect the tax due and the amount owed is less than £3,000. If the tax cannot be collected in this way, HMRC will write to the taxpayer. Check the calculation It is dangerous to simply assume the tax calculation is correct – it should always be checked. Particular problems are known to arise as regards the allocation of allowances where the taxpayer has more than one source of income. Under current rules, allowances should be allocated so as to give the best outcome. However, in practice this does not always happen, and errors can result particularly in relation to the application of the savings nil rate band. If you think the calculation is wrong, contact HMRC. If they agree that the calculation is incorrect, they will issue a new one. If they don’t agree, they will explain why.
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Child benefit and paying the HICBC The High Income Child Benefit Charge (HICBC) claws back child benefit if the recipient and/or their partner earns more than the threshold. For 2026/27, the charge applies once adjusted net income exceeds £60,000. Where both the recipient and their partner have adjusted net income of more than £60,000, the charge is levied on the one with the highest income. The person liable to pay the charge may not be the person who received the child benefit. The charge claws back 1% of the child benefit for the tax year for every £200 by which adjusted net income exceeds £60,000. Once adjusted net income reaches £80,000, the HICBC is equal to the child benefit for the year. For 2026/27, child benefit is set at £27.05 per week for the eldest child and £17.90 per week for each additional child. Opting not to receive the benefit Where the HICBC will claw back all the child benefit for the tax year (which will be the case where adjusted net income is £80,000 or more), it may be preferable not to receive the child benefit rather than receiving it and paying it back. A person can opt out of receiving child benefit either by using the online service or completing the online form. It is important to claim child benefit then opt out (rather than simply not claiming it) to benefit from the associated National Insurance credits, particularly where the claimant would not otherwise secure a qualifying year for state pension purposes.
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Paying the charge through Self-Assessment It used to be the case where a taxpayer needed to pay the HICBC, they had to register for Self-Assessment if not already registered and pay the charge through the Self-Assessment system. However, with the introduction of the PAYE service, the charge is now only payable through Self-Assessment where the person needs to send in a Self-Assessment tax return for another reason (as will be the case, for example, if they have trading, property or investment income) or if they have not paid the charge by 31 January after the end of the tax year to which it relates. Paying the charge through PAYE A new service was launched last year which allows taxpayers to pay the HICBC through PAYE, removing the need to register for Self-Assessment solely to pay the HICBC. The taxpayer’s tax code will be adjusted to collect the HICBC through PAYE. Taxpayers must register to use this service. However, the charge can only be paid through PAYE if all the following apply: · the taxpayer does not need to file a Self-Assessment return for another reason; · they are paying the tax for the current or previous tax year onwards; and · it is before 31 January after the end of the tax year to which the charge relates. A person who previously paid the charge through Self-Assessment can switch to paying through PAYE by contacting HMRC to be removed from Self-Assessment and to register to pay the charge through PAYE. If a person needs to be within Self-Assessment for another reason, the charge must be paid through Self-Assessment – it cannot be paid through PAYE.
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Payrolling benefits voluntarily in 2027/28 Mandatory payrolling is now being introduced in stages. From 6 April 2027 onwards, employers will be required to payroll: · company cars; · car fuel; · vans; · van fuel; and · medical benefits. For 2027/28, employers can opt to payroll all other benefits voluntarily, including taxable cheap employment-related loans and living accommodation benefits which cannot currently be payrolled. However, non-mandatory benefits can only be payrolled in 2027/28 if they have been registered for payrolling.
2028/29 From 6 April 2028, all remaining benefits with the exception of taxable cheap employment-related loans and living accommodation benefits will be brought within mandatory payrolling. The only benefits for which payrolling is voluntary in 2028/29 are employmentrelated loans and living accommodation benefits. Employers will be able to payroll these voluntarily if they have registered them for payrolling using the new service.
New service The service previously used to register benefits in kind for payrolling has been closed down. It is to be replaced with a new service which is to be launched in November 2026. From that date, employers will be able to register benefits for voluntary payrolling from 6 April 2027. Where benefits are not registered for voluntary payrolling in 2027/28, the employer will continue to report them to HMRC after the year end on the employee’s P11D. To voluntarily payroll benefits in 2027/28, they must be registered before the start of the 2027/28 tax year.
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Tax refunds for more than one tax year HMRC are changing the way that tax refunds are made to the majority of taxpayers who make a multi-year P800 tax refund claim. Claims must usually be made no later than four years from the end of the tax year to which the claim relates. Employees making a claim for a multi-year tax refund will need to request their repayment using HMRC’s digital services. They will no longer receive the repayment automatically by cheque. This change brings multi-year refunds in line with the wider P800 repayment process under which taxpayers must take action in order to receive money that they are owed by HMRC. Once a multi-year claim has been processed, the taxpayer will receive a P800 tax calculation letter which will ask them to request their repayment. The quickest way to do this is through their HMRC personal account or via the HMRC app. However, the taxpayer does not need to be fully set up for HMRC’s online service in order to request their repayment as they can request their refund using the online service on the Gov.uk website at www.gov.uk/tax-overpayments-and-underpayments rather than signing in through the Government Gateway. To do this, they will need the unique reference number in their P800 letter and their National Insurance number. Taxpayers who are digitally excluded or who prefer a cheque can still get one, although they will need to wait longer for their money.
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Withdrawal of capital from a business – Have the rules changed? At the beginning of July 2026, HMRC amended several pages of its Business Income Manual relating to business funding and specifically to the withdrawal of capital from unincorporated businesses (BIM45690 – Funding the business and BIM45700 –Withdrawal of capital from a business). HMRC says the changes give clearer context and remove unnecessary calculations – but many commentators believe that the way in which the text has been written restricts interest relief on borrowing used to fund capital withdrawals from a business. Basic law Tax law states that interest is allowable only if incurred ‘wholly and exclusively’ for the purposes of the business. ‘Business’ applies to trading activities and property businesses. The test looks at the purpose of the borrowing, not simply where the money ends up. Where a loan serves both business and private purposes, the interest must be apportioned, with only the business element being deductible. Before the rewrite, a business owner could withdraw capital they had introduced plus accumulated profits. If the business replaced that funding with borrowing, full interest relief was allowed, even if the money was withdrawn for personal use, the only restriction being where the drawings made the capital account overdrawn. Change in guidance The updated guidance states that ‘simply exchanging existing capital for loan finance does not on its own satisfy the wholly and exclusively test’. It adds that interest remains allowable where the borrowing is used for business expenditure or to acquire assets used in the business. However, some commentators read this as meaning that interest on substitute borrowing will almost always fail, because a capital withdrawal is intrinsically private in purpose. HMRC's example 3 in BIM 45700 explains that when officers are considering how much of a loan has a private purpose, they should look at the borrower's purpose when the funding was obtained and at what could have been withdrawn without the loan. As an example, if a business property is remortgaged and that extra capital is invested back into the business for repairs, etc., so long as the value of the capital in the business is not exceeded then full interest relief remains deductible.
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OCTOBER - ISSUE 33 Problem The rewrite potentially creates a problem where the owner has invested their own money in the business and now wishes to withdraw that money for personal use. If the business replaces that capital with a loan then, although the funds remain in the business, interest relief may be refused. However, if the full original funding was via a loan, interest will be deductible in full. The following example shows the differences between the pre- and post-July 2026 text: Sarah put £100,000 of her own money into her business. She withdraws £60,000 for personal use, and the business borrows £60,000 to replace it at 5% interest. The loan remains in the business, so under the old guidance the £3,000 annual interest was fully deductible. Under the rewritten guidance, HMRC could argue that the loan's purpose was to fund the private withdrawal and disallow the interest. Had Sarah originally funded the property with £40,000 of her own savings and a £60,000 loan, the same £3,000 interest would be deductible in full, and it is this inconsistency that is concerning. Overdrawn capital account HMRC’s text states that an overdrawn capital account is merely an indication that borrowing is being used to fund private expenditure. The instruction to officers is that further investigation may be needed to ascertain whether personal drawings have resulted in the overdrawn capital account and, if financed by borrowing, then to restrict any interest. Is this a new rule? The rewrite may simply be bringing the manual into line with how some officers already viewed these situations. HMRC's rewritten guidance suggests they may now challenge interest relief more readily where the withdrawn money is used personally. Practical point The revised sections cover unincorporated trades and property businesses only, so companies, which fall under the loan relationship rules, are not directly affected. Note that manual guidance is not law, so taxpayers can still appeal if interest is disallowed.
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Our Services at Go Figure Financial At Go Figure Financial, we work with business owners who want clarity and control over their finances. As Chartered Accountants, we provide reliable bookkeeping, accounting, and tax support that helps you stay compliant, organised, and confident in your financial numbers. Whether you’re a sole trader, limited company, or growing business, we take the time to understand how you operate, and tailor our services to suit your needs. Our support covers everything from day-to-day bookkeeping and cloud accounting systems to monthly management accounts that give you a clear view of performance and cash flow. We don’t just prepare the numbers — we explain them in plain English, helping you understand what’s working, where improvements can be made, and how to plan ahead with confidence. We also manage your key tax obligations, including Self Assessment, Corporation Tax, VAT, payroll, and CIS, ensuring deadlines are met and reporting is accurate. With fixed-fee pricing, there are no surprises, making it easier to budget and plan throughout the year. With straightforward communication, practical advice, and dependable support, Go Figure Financial acts as a trusted financial partner to your business — allowing you to focus on growth while we take care of the numbers. If you’d like to find out more about how we can support you, get in touch with our team today for a complimentary consultation. Visit our website or contact us directly to start the conversation.
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MANCHESTER DIDSBURY BUSINESS CENTRE , 137 BARLOW MOOR ROAD, DIDSBURY, MANCHESTER, M20 2PW LONDON 1 HARLEY STREET, MARYLEBONE , LONDON, W 1G 9QD
020 3700 8178 WWW.GOFIGUREFINANCIAL .COM
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