Month: July 2026

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:

• Condition A – Disguised salary: At least 80% of the member’s remuneration is fixed, or any variable element is not linked to the LLP’s overall profits or losses. 
• Condition B – Lack of influence: The member does not have significant influence over the affairs of the LLP. 
• Condition C – Insufficient capital stake: The member’s capital contribution is less than 25% of their expected annual remuneration.

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:

• Companies
• Individuals who only invest capital in the LLP
• Former active members who no longer provide services but continue to receive a share of profits.

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. 

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.

At some point in the life of a business, additional funding may be needed to support growth, purchase equipment, recruit staff, invest in new premises or simply strengthen cash flow. While there are now many alternative finance providers, banks remain an important source of business funding for many organisations.

Preparing thoroughly before approaching your bank can significantly improve your chances of securing the finance you need.

Be clear about why you need funding

One of the first questions a lender is likely to ask is how the money will be used. Businesses that can clearly explain the purpose of the funding and demonstrate the expected benefits are often viewed more favourably.

Whether the funds are required for expansion, working capital, equipment purchases or another purpose, it is important to present a clear and realistic case.

Prepare up-to-date financial information

Lenders want to understand the financial position of the business before making a lending decision. Recent accounts, management accounts, cash flow forecasts and details of existing borrowing may all be requested.

Accurate and well-presented financial information helps demonstrate that the business is being managed effectively and that the owners understand its financial performance.

Demonstrate affordability

Banks are primarily concerned with whether a business can repay the borrowing. A realistic cash flow forecast showing how repayments will be funded can provide reassurance and strengthen an application.

Avoid overly optimistic assumptions. It is usually better to present cautious and achievable forecasts that can be supported by evidence.

Understand your credit position

Before making an application, it is sensible to review both business and personal credit records where appropriate. Addressing any issues in advance can help avoid delays and improve the likelihood of approval.

Lenders may also consider factors such as trading history, profitability and the experience of the management team.

Build a relationship with your lender

Funding applications are often easier when there is an established relationship with the bank. Keeping your lender informed about significant developments and discussing future plans before finance is needed can be beneficial.

Approaching a bank early, rather than waiting until cash flow problems become urgent, usually provides more options and creates a more positive impression.

Give yourself the best chance of success

A well-prepared funding proposal supported by reliable financial information can make a significant difference to the outcome of an application. Careful planning also helps ensure that the type and amount of funding requested are appropriate for the business’s needs.

How we can help

If you are considering seeking finance for your business, we can help prepare forecasts, review funding requirements and present financial information in a format that lenders expect to see. Please contact us if you would like to discuss your funding options.