21st August 2026 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend. 

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Free ICO training helps SMEs strengthen data protection
The Information Commissioner's Office (ICO), the UK's data protection regulator, has launched a free online training programme called ‘Data Protection Essentials’, aimed at small and medium-sized organisations and sole traders across the UK.

The course is designed to help organisations and their staff understand data protection requirements and apply them confidently in day-to-day operations. It includes real-world examples tailored to different sectors and addresses common activities such as sharing information, managing records securely, marketing and customer engagement, and reducing the risk of data breaches.

According to the regulator, the programme was developed in response to research showing many smaller organisations want more clarity on what data protection means in practice and how to apply it day-to-day, especially where there's no dedicated data protection expertise.

Key benefits for businesses taking part include:

• Improving how they manage and protect people's information.
• Using personal data confidently while reducing risk.
• Involving colleagues to build shared knowledge across the organisation.
• Understanding legal responsibilities more clearly.
• Demonstrating a commitment to protecting personal information and building trust.

Individuals completing the training receive a digital certificate that they can share publicly. Organisations can also undertake a short self-assessment and once completed, also earn a certificate and the option to be listed on a public Data Protection Essentials register.

Faye Spencer, the ICO's Head of Business Services, said the programme was designed “to be flexible, self-paced and easy to fit around busy working days. It breaks data protection into achievable steps that help build confidence over time. Our aim is to give organisations the confidence to use personal information responsibly and effectively, helping them build trust, reduce risk and achieve their goals”.

If your business handles personal data but does not have dedicated compliance expertise, this free training could be a cost-effective way to improve staff awareness and reduce risk. The ICO’s Data Protection Essentials page can be found here.
 
Making Tax Digital for Income Tax first quarter statistics published
Under Making Tax Digital (MTD) for Income Tax, sole traders and landlords with income of more than £50,000 have been required to keep digital records and send quarterly updates to HMRC since 6 April 2026.

The first quarterly submission deadline, covering the first three months of the 2026-27 tax year, passed on 7 August 2026. HMRC have since issued a press release confirming that 436,000 taxpayers filed their first quarterly tax update by the deadline and reminding those who have not submitted their update to do so using HMRC-recognised software.

Slow uptake
HMRC’s press release reveals that as of 12 August 2026, over 570,000 taxpayers had signed up for MTD for Income Tax.
In August 2025, based on 2023-24 figures, HMRC estimated that some 864,000 taxpayers would need to sign up from April 2026, meaning that around one third of taxpayers who should have registered for MTD for Income Tax from April 2026 had not signed up.

HMRC’s response
From September, HMRC will sign up taxpayers who are required to use MTD for Income Tax for 2026-27, but who have not yet registered for the service themselves. 

• Taxpayers can avoid being signed up by HMRC by signing themselves up now, ensuring their MTD details are correct at the outset.
• HMRC will publish guidance in late August to explain what taxpayers need to do if they receive a letter from HMRC about being signed up.

MTD for Income Tax should not be ignored, with HMRC reminding taxpayers that it is a legal requirement for sole traders and landlords earning more than £50,000 from self-employment and property to comply, unless exempt (e.g. due to digital exclusion). 

Taxpayers are also reminded that from April 2027, those earning more than £30,000 from self-employment and property will be required to comply.

Penalties
While HMRC have confirmed that there will be no penalty points for late quarterly updates in 2026-27, penalties will still apply for late tax returns and late payments.

Quarterly updates do not replace the Self Assessment tax return. Those within scope of MTD for Income Tax must submit their quarterly updates in order to file their tax returns by 31 January.

A points-based penalty system will be introduced from 6 April 2027. Taxpayers will receive one point for each missed quarterly deadline and a £200 fixed penalty once four points have accumulated.

If you have not yet registered for MTD for Income Tax and are concerned that it may apply to you, contact us as soon as possible so we can help you assess your obligations.

See 436,000 sole traders and landlords make their tax digital - GOV.UK
 
UK vacancies fall to lowest level since 2014 as hiring slows
The UK jobs market showed fresh signs of strain in the latest labour market figures, published by the Office for National Statistics on 18 August 2026.

Job vacancies fell to an estimated 707,000 in the three months to July, down 6,000 (0.8%) on the previous quarter. Outside the pandemic period, that's the lowest vacancy count since September to November 2014. The ONS said feedback from its Vacancy Survey pointed to smaller firms holding back on recruitment because of rising labour and operating costs.

Despite the weaker hiring picture, the headline unemployment rate held at 4.9% for people aged 16 and over in the April to June quarter, up 0.2 percentage points on the year, but down 0.1 points on the previous quarter. The employment rate for 16- to 64-year-olds stood at 75.1%, while economic inactivity was largely unchanged at 20.9%.

On pay, annual growth in regular earnings (excluding bonuses) in Great Britain was 3.5% in April to June, with total earnings (including bonuses) up 4.1%. The gap between sectors was stark: public sector regular pay grew 6.1%, reflecting the timing of NHS pay awards, while private sector growth slowed to 2.8%. Adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH), regular pay rose just 0.5% in real terms.

Separately, payrolled employee numbers continued their two-year downward trend, falling 78,000 (0.3%) year-on-year to 30.3 million by June, with an early estimate suggesting a similar picture into July.

Taken together, the data points to a labour market that remains subdued rather than in freefall; steady unemployment but weakening demand for new hires and softer private sector wage growth.

See Labour market overview, UK - Office for National Statistics
 
 
What should your employment law reform priorities be?
Acas's Julie Dennis has set out how HR teams should approach the Employment Rights Act 2025, one of the most significant changes to UK employment law in recent years, which became law on 18 December 2025 and is being phased in through 2026–2027.

Several changes are already in force, including:

• Statutory sick pay from day one (with the lower earnings limit removed).
• Day-one paternity and unpaid parental leave rights.
• A new bereaved partner's paternity leave.
• Stronger whistleblowing protection for those reporting sexual harassment.

For these changes, employers should have already reviewed related policies, payroll, and manager guidance, and communicated with staff. It is important to be clear that day-one leave rights don't always mean day-one pay rights.

Further reforms are still to come, covering unfair dismissal, harassment, flexible working, and zero-hours contracts, meaning businesses need a staged plan rather than treating this as a single change with one start date. This should not be a single compliance project; regular policy reviews will be essential, and businesses should not wait for the remaining reforms to take effect.

The compliance environment is also tightening. The new Fair Work Agency will consolidate enforcement powers, and employers must keep compliance records for six years, including holiday pay and annual leave records.

Acas recommends businesses:

1. Know the timeline: separate what has already changed from what is expected later.
2. Prioritise policy and contract review, especially sickness, family leave, flexible working, harassment, dismissal and records.
3. Train line managers. They need to understand the processes they are expected to follow and feel confident having early, fair and consistent conversations.
4. Strengthen compliance systems. Review how decisions are recorded, how evidence is kept and how employees are told about their rights. 

Acas points readers to its dedicated Employment Rights Act 2025 hub and a free recorded webinar for further detail.
 
Cost of business crisis for British SMEs
UK businesses are facing a “cost of business crisis”, according to the British Chambers of Commerce (BCC). Its new cost-stack calculator shows government policy alone has pushed up an average firm's expenses by 70% over the past decade, adding roughly £827,000 a year in costs for a typical mid-sized business. About a quarter of the rise stems from the increase in employer National Insurance contributions, with the higher minimum wage and mandatory pension auto-enrolment also major contributors.

The BCC warns this cost burden is pushing firms into a “risk-aversion cycle”, denting SME investment and confidence. The 70% figure excludes tariffs, inflation, and Brexit effects, meaning real cost increases are likely higher.

While businesses cannot control policy costs, they can review pricing, supplier contracts and operating efficiencies. Benchmarking your position against similar businesses may also help identify where cost increases can be recovered or reduced.

You can use the BCC’s cost-stack calculator to see how your business compares and submit your figures anonymously to help demonstrate the true scale of cost pressures facing British businesses.

Contact us if you would like assistance with cashflow forecasting, margin and pricing review or client profitability analysis.

See Government policies push business costs up by 70 per cent in a decade and Cost Stack Calculator - British Chambers of Commerce

7th August 2026 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend. 

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

QUESTIONS OVER FUTURE TAX CHANGES UNDER NEW PRIME MINISTER ANDY BURNHAM
Since becoming Prime Minister, Andy Burnham has made cost-of-living support a key focus. One headline measure announced this month is the planned removal of VAT on household electricity from October 2026, which the Government estimates could reduce average household bills by around £45 a year. Household electricity is currently subject to VAT at 5%.

At the same time, attention is turning towards how future tax policy might develop. Economists and commentators are already speculating about whether further tax reform could feature in the Autumn Budget.

For business owners, landlords and investors, the key message is not to react to headlines. Many of the most talked-about measures remain informal proposals or speculation, rather than law. Changes to capital gains tax, property taxation and other wealth-related taxes have all been widely discussed, but little has been formally confirmed at this stage.

History shows that major tax changes are often signalled well before implementation. That means now is a good time to review long-term plans, particularly if you are considering property sales, business disposals or succession planning.

Our recommended approach:

• Avoid making rushed decisions based on speculation.
• Review your current tax position.
• Consider scenario planning ahead of the Autumn Budget.
• Seek advice before implementing major transactions.

The coming months are likely to bring further tax announcements, making regular reviews of your business and personal plans more important than ever. If you’d like to discuss any of the above issues, please get in touch with us - we’d be happy to help.

HMRC’S 2026 TAX UPDATE
Prior to Andy Burnham’s appointment as Prime Minister and the appointment of John Healey as Chancellor, HMRC published a raft of consultations and policy announcements on 23 June 2026.

The wide-ranging package of consultations and policy announcements was aimed at making the tax system simpler, more digital and, in HMRC's words, fairer. While many of the proposals are still at consultation stage, they give us an indication of the government's direction of travel over the next few years.

ACCELERATED, MORE FREQUENT, TAX PAYMENTS
Perhaps the most significant proposal is a consultation on "Timely Payments" for Self Assessment taxpayers.

The government is exploring ways to collect more tax during the year rather than relying on large payments due each January and July. For taxpayers who have both PAYE income and Self Assessment income, the proposal could require more of their tax liability to be collected through PAYE from April 2029.

HMRC is also considering wider reforms to the Payments on Account regime for other Self Assessment taxpayers. These reforms would require taxpayers to pay all of their forecast tax liability during the tax year, with a balancing payment/repayment being due when their tax position is finalised on the 31 January following the end of the tax year.
 
For many sole traders and landlords, spreading payments throughout the year could help with budgeting and reduce the shock of large tax bills. However, it may also accelerate when tax is paid, affecting cash flow planning.

REVIEW OF BENCHMARK SCALE RATES
Employers should note that HMRC is reviewing its Benchmark Scale Rates (BSRs) and Overseas Scale Rates (OSRs).

These are the flat-rate allowances businesses can use to reimburse employees for meals, accommodation and travel expenses without checking every receipt. The government says the review will consider whether current rates still reflect actual costs and whether the system can be simplified.

For growing businesses with travelling staff, any simplification could reduce administrative work and improve consistency in expense claims.

ELECTRONIC INVOICING
HMRC's Tax Update included an important announcement about the future of electronic invoicing (e-invoicing) in the UK. The government confirmed that the ‘Peppol’ framework will be the core network used to support the UK's planned e-invoicing system.

Electronic invoicing is not simply emailing a PDF invoice. Instead, invoices are created in a standard digital format and sent directly between accounting systems. This reduces manual data entry, improves accuracy and can speed up payment processing. Peppol is an international framework that enables different accounting and finance systems to exchange invoice data securely and consistently.

The government is working towards a mandatory e-invoicing regime from 2029, primarily covering VAT invoices for business-to-business and business-to-government transactions. HMRC has confirmed that businesses will exchange invoices through software providers rather than through a central government platform.

For small businesses, now is not the time to panic. However, it is a good opportunity to review bookkeeping and invoicing systems.

Businesses already using modern cloud accounting software are likely to find the transition easier than those relying on manual processes.

The full implementation roadmap is expected later in 2026.

PROPOSED CHANGE TO THE CGT HOLDOVER RELIEF CALCULATION
The government has published draft legislation to correct an anomaly in the Capital Gains Tax (CGT) holdover relief rules for gifts of business assets, which allow a capital gain on a gift to be deferred until the recipient disposes of the asset. The proposed change would amend the formula used to calculate relief on certain share transfers, helping ensure the relief operates as intended.

The measure is not yet law, but it could improve the tax position for some business owners transferring shares as part of succession planning, family ownership arrangements or business restructures.

If you are considering a transaction that may be affected, it may be worth discussing whether it can be delayed until the legislation is enacted. Waiting could result in a more favourable outcome, although professional advice should be sought before making any decisions.

MODERNISING HOW COMPANY PAYMENTS TO SHAREHOLDERS ARE TAXED
The government has also launched a consultation on modernising the rules that determine how some payments from companies to shareholders are taxed.

Many of these rules date back decades and have become increasingly complex. The review covers areas such as distributions, returns of capital, company reorganisations and interactions with the loans to participators rules.

For owner-managed businesses, this is unlikely to lead to immediate changes, but it signals potential reform of an area that affects dividends, company restructures and extraction of profits.
 
FURTHER DIGITAL COMPLIANCE AND ANTI-FRAUD MEASURES
Several consultations focus on tackling tax evasion and improving compliance.

These include proposals to extend VAT liability rules for online marketplaces, introduce software standards to combat electronic sales suppression systems, and create a new offence for making reckless untrue statements in direct tax matters.

For compliant businesses, these measures are largely aimed at creating a level playing field by targeting those who deliberately understate sales or avoid tax obligations.

WHAT HAPPENS NEXT?
Most of the measures announced on 23 June are consultations rather than immediate law changes. However, they provide an early warning of where tax administration is heading:

• Greater use of digital systems.
• More real-time tax reporting and payment.
• Increased focus on compliance and data.
• Simplification of some long-standing tax rules.

For now, the best approach is to keep good records, maintain robust bookkeeping systems and monitor consultations that could affect your business. Many of today's consultations have the potential to become tomorrow's tax rules.

To read the Tax Update, see here.

HMRC TARGETS SIDE HUSTLE INCOME
HMRC has launched a fresh summer campaign reminding people with "side hustles" that extra income may need to be reported for tax purposes. The announcement specifically highlights people earning income from wedding services, online selling, content creation, freelancing and similar activities.

The key figure remains the £1,000 trading allowance. If total income from side activities exceeds £1,000 during the tax year, there may be an obligation to register for Self Assessment and declare the income to HMRC.

This is particularly relevant because HMRC now receives increasing amounts of information from digital platforms. Data from marketplaces and gig economy platforms can be matched against tax returns, making it easier for HMRC to identify undeclared income.

Importantly, not everyone selling online has a tax problem. Selling unwanted personal possessions is generally not taxable. However, regularly buying or making goods to sell, or providing services for payment, is likely to be treated as trading.

If you have a side hustle, you should:

• Review any additional income streams.
• Check whether total trading income exceeds £1,000.
• Register for Self Assessment if required.
• Keep proper records from the outset rather than trying to reconstruct them later.

Early disclosure is almost always easier and cheaper than dealing with an HMRC enquiry.