Other news in brief

The decision in Environmental Services Ltd v HMRC [2026] UKFTT 1301 (TC)  relates to the claimant’s appeal against HMRC’s disallowance of the company’s research and development (R&D) tax relief claims for the accounting periods ended 31 July 2020 and 31 July 2021. Notably, the First-tier Tribunal (FTT) accepted that the company had undertaken innovative work involving experimentation and practical problem-solving, and that the individual responsible for the technical work was a sufficiently experienced and knowledgeable ‘competent professional’. However, the FTT rejected the appeal on the basis that the claimant had not demonstrated that the projects sought an advance in overall knowledge or capability in a field of science or technology. Instead, the projects represented mere commercial and operational improvements to the claimant’s own activities. Of relevance to other companies intending to claim R&D tax relief, the decision highlights that trial and error, commercial ingenuity, and operational or competitive advantage do not, by themselves, constitute qualifying R&D. It also reiterates the importance of retaining contemporaneous evidence, linking qualifying expenditure to eligible activities, and confirms the requirement for assessments made by a competent professional that clearly identify each project’s relevant field of science or technology, the baseline knowledge or capability, the advance sought, and the scientific or technological uncertainties encountered.

Reporting and paying income tax and Class 1A National Insurance Contributions (NIC) through payroll on most benefits in kind and taxable expenses will become mandatory in two phases from 6 April 2027. HMRC recently updated their interim guidance to state that, from 6 April 2027, employers can voluntarily exclude benefits provided to ‘globally mobile employees’ (which HMRC have yet to define) from mandatory payrolling. A new HMRC service will be available from November 2026 to manage these exclusions, allowing employers to continue using the existing P11D and P11D(b) reporting process for affected employees. The scope of the ‘globally mobile employee’ population will be key for employers as additional guidance is released, particularly where their workforce includes business travellers, short-term assignees, international commuters, and other internationally mobile workers. HMRC’s updated interim guidance also confirms that Class 1A NIC on benefits that are voluntarily payrolled from 6 April 2027 (i.e. for which payrolling has not yet become mandatory) must be reported and paid through payroll in real time. This will remove the ability to voluntarily report and pay income tax through payroll while reporting the related Class 1A NIC through the year-end P11D(b) process. These developments could have wider implications for payroll operations, benefits governance, and compliance readiness for the phased introduction of mandatory payrolling from April 2027.

On 14 September 2026, the Individual Savings Account (Amendment) (No. 2) Regulations 2026 were laid before Parliament. These amend the ISA Regulations to give effect to the new £12,000 per annum limit on subscriptions to cash ISAs, which will be introduced from April 2027. The legislation also includes some anti-avoidance rules which prevent or disincentivise savers from holding cash in stocks and shares ISAs, including a flat rate charge on interest paid on cash, and a prohibition of stocks and shares ISAs which only invest in Money Market Funds. The regulations are substantially similar to the draft issued earlier in the summer, with the only significant change clarifying that the charge on interest paid in a stocks and shares ISA is a charge, and not tax.