The latest UK tax changes affecting small businesses, landlords, company directors and employers – explained in plain English.
This summer brings a temporary VAT cut for leisure and hospitality businesses, the first mileage rate increase in fifteen years, tighter Self Assessment reporting for company directors, a new pilot service for R&D (Research and Development) claims, expanded international reporting on cryptoassets, and a Supreme Court ruling that narrows capital allowances. None of these changes transforms the tax system on its own.
Together, they confirm one clear direction of travel: HMRC wants better records and more visibility, and organised businesses will find compliance far easier than those who aren’t.
There haven’t been any headline-grabbing changes to Income Tax or Corporation Tax rates, but there are plenty of developments that will affect businesses, landlords and company directors over the coming months. Some create opportunities. Others create more administration. A few do both.
At the time of writing, there is also considerable political uncertainty, with speculation about further changes before the Autumn Budget. That means planning around legislation already announced is more important than trying to predict what may or may not happen later in the year.
Here are the developments we think are most worth paying attention to.
Key Takeaways
- VAT reduction: 5% VAT (reduced from 20%) on eligible entertainment and hospitality services from 25 June to 1 September 2026.
- Increased mileage rate by 22%: increase from 45p to 55p per mile for first 10,000 business miles starting 6 April 2026.
- Directors face more disclosure: close company directors must report name, registration number, dividends and shareholding from 2025/26.
- Early decision-making on R&D claims: HMRC’s Advance Assurance program reviews eligibility of claims before submission.
- Crypto asset reporting strengthened: CARF reporting requirements were introduced to gather information since 1 January 2026.
- Limited capital allowances: the Supreme Court has ruled that most pre-development surveys are ineligible for capital allowances.
1. Temporary VAT Cuts Could Benefit Some Businesses, But Create Extra Work
Between 25 June and 1 September 2026, qualifying supplies will attract 5% VAT instead of the normal 20%, but businesses need to be careful about coding, pricing and invoicing errors, especially when the scheme ends.
The scheme is aimed primarily at helping families during the summer holidays while encouraging spending in the leisure and hospitality sectors.
Businesses that may benefit include:
- Restaurants and cafés (on qualifying children’s meals)
- Cinemas
- Theatres
- Museums
- Zoos
- Soft play centres
- Adventure parks
- Family attractions
- Similar leisure venues.
For customers this is welcome, for businesses it’s slightly more complicated, temporary VAT changes always increase the risk of:
- Incorrect VAT coding
- Till programming errors
- Pricing mistakes
- Incorrect invoices
- Underpayments or overpayments of VAT.
The real challenge isn’t the reduction itself; it’s remembering to reverse everything correctly once the temporary period finishes. For the full rules on which goods and services qualify for reduced rates, see HMRC’s VAT rates guidance.
2. Mileage Allowances Finally Increase
From 6 April 2026, the approved mileage rate for cars and vans rose to 55p per mile for the first 10,000 business miles (then 25p per mile after that) – a 22% increase and the first change in around fifteen years.
Many business owners have wondered why HMRC’s approved mileage rates remained unchanged despite years of rising fuel costs.
Finally, that has changed, this is the first increase for around fifteen years, for employees and directors using their own vehicles, this is good news.
However, one important point often gets overlooked, the mileage rate only applies to qualifying business journeys.
Travelling from home to your normal place of work is usually ordinary commuting and doesn’t qualify, that distinction catches many businesses out.
Incorrect mileage claims can create unexpected PAYE and National Insurance liabilities if HMRC later concludes journeys were not business travel, good mileage records remain essential.
3. More Reporting for Company Directors
If you’re the director of your own limited company, your Self Assessment return is about to become more detailed.
For the 2025/26 tax year onwards, directors of close companies will need to provide additional information including: the company name registration number dividend income received percentage shareholding they were previously optional disclosures in many cases.
- The company’s name
- Company registration number
- Dividend income received
- Percentage shareholding.
These were previously optional disclosures in many cases, they are now mandatory, most owner-managed companies fall within the definition of a close company.
It’s another reminder that HMRC increasingly wants a fuller picture of how owner-managed businesses operate.
From our perspective, this makes good bookkeeping and accurate dividend records even more important. See HMRC’s Company Taxation Manual on what counts as a close company if you’re unsure whether this applies to you.
4. HMRC Wants Better Information, Not Just More Information
Beyond Making Tax Digital, HMRC’s broader direction is towards more mandatory disclosures, better digital records and greater data-matching across taxes, meaning incomplete or inaccurate records become harder to hide behind.
Across almost every area we’re seeing:
- More mandatory disclosures
- Better digital records
- Improved data matching
- Greater visibility between different taxes.
The additional reporting for company directors fits neatly into that wider picture, whether it ultimately improves compliance remains open to debate. What it certainly does mean is that incomplete or inaccurate records become harder to hide behind.
5. R&D Claims May Become Less Uncertain
HMRC has introduced a pilot Advance Assurance service letting eligible companies get its view on specific aspects of an R&D claim before submitting it, which could reduce uncertainty at a time when overall claim numbers have fallen sharply.
This context matters more than ever. HMRC’s most recent statistics show the number of R&D tax relief claims fell by 26% compared with the previous year – the lowest number of claims in nearly a decade – while the total value of relief claimed came to around £7.6 billion for the 2023–24 tax year (HMRC R&D Tax Credit Statistics, September 2025). Much of that fall has been attributed to increased compliance requirements and HMRC’s stepped-up enquiry activity into claims.
This won’t suit every business.
However, for companies undertaking genuinely innovative work, it could reduce uncertainty considerably. Rather than waiting years to discover HMRC disagrees with a claim, businesses may now obtain clarity much earlier.
If your company invests heavily in development work, software, engineering or technical innovation, this is worth discussing before your next claim.
6. Crypto assets Remain Very Much on HMRC’s Radar
From 1 January 2026, new international reporting rules under the Cryptoasset Reporting Framework (CARF) mean crypto service providers are now collecting far more transaction and account-holder data for HMRC, even as UK crypto ownership has recently fallen.
From 1 January 2026, new international reporting rules begin under the Cryptoasset Reporting Framework (CARF). Although the first reports won’t be submitted until 2027, cryptoasset service providers will begin collecting much more information on transactions and account holders.
HMRC will increasingly receive overseas data automatically. The FCA has reported that the proportion of UK adults holding cryptoassets actually fell from 12% in 2024 to 8% in 2025 (FCA, Cryptoassets Consumer Research 2025), even as the value held by remaining investors has risen fewer owners doesn’t mean less scrutiny.
If you’ve bought, sold or exchanged crypto assets, make sure your records are complete.
Many people mistakenly believe crypto is anonymous.
7. A Supreme Court Decision Could Affect Capital Allowances
A Supreme Court judgment has overturned an earlier Court of Appeal decision, meaning many pre-development survey costs incurred before installing plant or machinery will no longer qualify for capital allowances.
For businesses investing in:
- Renewable energy
- Manufacturing
- Engineering
- Large construction projects
this could materially increase the real cost of investment.
It reinforces the value of obtaining tax advice before committing significant sums to major capital projects.
What Does All This Mean for Your Business?
Individually, none of these announcements transforms the tax system. Collectively, they confirm a clear trend towards more digital reporting, greater transparency and more automatic data-sharing with HMRC.
We’re seeing:
- More digital reporting
- Greater transparency
- More detailed compliance
- Increased emphasis on accurate records
- More information flowing automatically to HMRC
That means the businesses who stay organised will increasingly find compliance straightforward. Those relying on reconstructed spreadsheets and missing paperwork will probably find life becoming harder.
Practical Actions to Consider This Summer
Use the quieter summer months to check your bookkeeping, dividend records, mileage claims, VAT coding, R&D position and cryptoasset records are all up to date.
If you’re a business owner, director or landlord, we’d suggest using the quieter summer months to review a few basics.
Ask yourself:
- Is your bookkeeping fully up to date?
- Are your dividend records complete?
- Are mileage claims properly documented?
- Are VAT codes correct following the temporary summer changes?
- If you undertake R&D, should Advance Assurance be considered?
- If you’ve invested in crypto assets, are your transaction records complete?
None of these jobs are particularly exciting.
All of them become far more difficult if left until January.
Final Thoughts
Politics may change over the coming months; budgets come and go. Tax rates rise and fall, what rarely changes are the value of keeping good records and planning ahead. Businesses that treat tax as something to think about once a year generally spend more time reacting.
Businesses that keep on top of their numbers throughout the year usually have more choices, fewer surprises and far less stress. That’s ultimately where good accountancy adds value not simply completing tax returns, but helping clients stay ahead of the next change rather than constantly catching up.
Before the Autumn Budget, if you would like some assistance understanding all of these changes, please consult Carter Collins & Myer. Please contact our team today to set up a meeting.
Need Help Understanding the Latest Tax Changes?
If you’re ensure how any of these changes will impact your business or your personal tax situation, we’d be glad to assist you.
At Carter Collins & Myer, we help owner-managed businesses, landlords, charities and individuals nationwide with our practical, no-compliance information. From VAT, Making Tax Digital, company directors’ tax returns, R&D claims, through to planning your day-to-day business, we can help you understand the rules and what they mean for you.
Contact our team to discuss the changes that will be coming next in the Autumn Budget, and help make sense of it all.