31st July 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

Andy Burnham’s new government, a balancing act
Andy Burnham’s first days as Prime Minister have been marked by a flurry of announcements designed to show that his government intends to move quickly. Presenting himself as a leader focused on easing pressure on households and rebuilding trust in politics, Burnham has begun reshaping government while signalling the priorities that will define his administration.

His first major moves were aimed directly at the cost-of-living crisis, announcing a reduction in VAT on household energy bills, followed by a single bus fare policy across England that will be capped at £2 for a year from January 2027.

Mr Burnham described affordable public transport as an essential service and argued that no one should be excluded from opportunities because they cannot afford to travel.

The Prime Minister has also promised a 20% reduction in business rates for pubs, clubs and live music venues for 2027-28. This is in addition to the 15% relief for 2026-27 with bills being frozen in real terms for a further two years. The new 20% discount will not be available to the very largest live music venues. Further details will be set out at the Budget.

However, questions are already being raised about how these promises will be funded as the government plans to divert hundreds of millions of pounds from other budgets, including money previously earmarked for international climate finance projects.

The government has said that the business rates reduction will be paid by reviewing reliefs for businesses that are not considered to make a positive contribution to local communities, such as vape shops. Businesses that sell through online marketplaces but do not comply with their tax obligations will also be targeted. A consultation on how this may be achieved was published in June 2026.

Mr Burnham has also started to build his ministerial team, with the surprise announcement being the appointment of John Healey as Chancellor. The former defence secretary, who resigned from Sir Keir Starmer’s cabinet over spending plans, will be seen as an advocate for boosting defence spending. Companies such as BAE Systems and Babcock saw their share prices rise after his appointment.

Mr Healey is regarded as experienced and fiscally responsible.

The government insists that fiscal discipline remains a priority, but speculation continues about whether future spending plans will require higher taxes or additional borrowing.

Taken together, the first week of Burnham's government paints a picture of an administration trying to balance competing priorities, wanting to reduce living costs while maintaining fiscal credibility.
 
Deadline for first Making Tax Digital quarterly update fast approaching
Sole traders and landlords that are required to use Making Tax Digital (MTD) to report their earnings are due to send their first quarterly update by 7 August 2026.

The quarterly update involves sending income and expenses for the first three months of the tax year to HMRC.

After an update is made, it is possible to see an estimated tax bill based on the figures provided. How accurate the estimate is will depend on earnings for the rest of the tax year, but it may help with budgeting for payments.

Quarterly updates do not replace the need to complete a tax return at the end of the year, and there is no change to the dates when tax payments need to be made.

If you have any questions about MTD or need help filing your quarterly update, please get in touch. We’re here to help!
 
Self-drive start-up fishes for cash
Earlier this month, British autonomous vehicle company Wayve became the first large company to trade its shares on the London Stock Exchange Group’s new private markets platform.

So far, it was the largest deal under the new Private Intermittent Securities and Capital Exchange System (PISCES) legislated in Finance Bill 2025-26.

A PISCES platform, which requires FCA permission, can only operate as a secondary market for the trading of existing shares and not a way to raise capital through the issue of new shares (though participating companies may be more attractive to primary investors as a result of greater liquidity). It gives new investors easier access to growth companies pre-IPO and allows early-stage investors and other shareholders, including employees, to realise their investments.

The Cambridge company raised over $1.2 billion in a fundraising exercise in February from investors that included Mercedes-Benz, Stellantis and Nissan and a later $60 million from AMD, Arm and Qualcomm. Those investment rounds valued the company at $8.6 billion.

The idea creates a Private Securities Market (PSM) that is especially beneficial to employees or management.

Share options have been around for some time, especially for tech startups that find it difficult to pay Silicon Valley salaries in their early years. Recipients of the options will not get any cash until there is an Initial Public Offering, which may never happen.

So far this year, only seven companies have listed in London, outstripped by private takeovers of British companies, with the Financial Times reporting that the value of bids for London-listed companies has outstripped new entrants’ value by 27 to one.

Small companies should pay attention, too. The new market offers a way for existing company share schemes to benefit as well as helping the businesses grow.

Why companies should be aware
Joining the PISCES system comes with enhanced governance requirements and may mean updating a business's Articles of Association and being aware of changes in tax circumstances for both employees and the company.

Under the Employment-Related Securities (ERS) regime, if, at the time of an acquisition of shares by an employee, arrangements exist for the shares to be traded on a PISCES platform, they will be viewed as Readily Convertible Assets (RCAs). 

Provided that Enterprise Management Incentive (EMI) options are granted for commercial purposes to recruit and retain employees, it will be acceptable for a PISCES trading event to be a specified occasion, allowing employees to exercise their options. 

Company Share Option Plans (CSOPs) are subject to the requirement to hold options for three years from grant, but a PISCES trading event can be a specified event to allow employees to exercise their options. Existing option agreements can be amended to include a sale on a PISCES platform as a specified exercise event.

Share buybacks will not be permitted at the outset because of the associated complexity.

Background
The first company to be listed on the new PISCES market for private companies was QPlay, a board game maker. JP Jenkins pipped the London Stock Exchange (LSE) to list the first company under the scheme. JP Jenkins is a British company that has long facilitated the trading of shares in unlisted companies through its regulated platform and attained its approved status for PISCES three months after the LSE. 

The LSE had announced that shares in Oxford Science Enterprises, an early-stage Venture Capital fund best known for investing in quantum computing firm Oxford Ionics, would be the first to trade on its Private Securities Market (PSM), but it was pipped by QPlay.
 
External examiners mark HMRC’s performance as ‘Poor’
The latest annual report from the Charter Stakeholder Group remains highly critical of HMRC's service performance, with scores either stagnant or deteriorating across most standards. Alongside poor scores for responsiveness and ease of use, the report highlights overwhelmingly negative feedback on Making Tax Digital (MTD).

The Charter Stakeholder Group monitors HMRC's performance against the HMRC Charter, a set of service standards. The 2025-26 assessment was based on a survey of 719 taxpayers and agents who were asked to rate HMRC's performance against each standard on a scale of one to 10.

Of the seven charter standards assessed, only one recorded an improved score compared with 2025.

The poor score is a blow to the government that set out a plan to replace a paper-heavy agency with a ‘world-class’ digital-first organisation. Around £7 billion was committed to modernising HMRC’s old computer systems and infrastructure. This would reduce the headcount in customer contact functions and increase compliance team numbers to bring in more revenue. The technology would be able to respond to customers faster and more accurately, reduce the tax gap of about £59 billion and deter fraud.

Unfortunately, the latest report shows HMRC failing on all levels.

Key findings

Being responsive
Being responsive was HMRC's lowest-scoring charter standard for the third year in a row, with an average score of 2.8 out of 10, down from 3.0 the previous year.

Tax agents were more critical than taxpayers generally, giving HMRC a score of 2.6. The respondents highlighted persistent postal delays, poor first-time resolution, limited helpline expertise, no effective case tracking or escalation and slow complaints handling.

In particular, there was a feeling that there was one rule for HMRC and another for taxpayers, with an imbalance between HMRC’s response times and the deadlines it imposes on taxpayers.

Making things easy
This category scored 3.25, making it HMRC's second-worst performing standard. Nearly two-thirds of respondents rated HMRC at three or below and more than a quarter gave a score of one.

Tax agents were particularly critical of HMRC's continued push towards online tools while their agent-dedicated phone line was staffed with people with insufficient technical knowledge and a lack of understanding of how agents work.
 
Getting things right
Getting things right scored 3.97, down from 4.1 in 2025. Almost one-fifth of all respondents gave a score of one. Respondents said HMRC staff often lacked sufficient training and expertise and that helpline services provided inconsistent guidance.

A recurring observation was that correcting HMRC errors often requires multiple contacts and lengthy delays.

Accountability
Nearly 82% of respondents felt HMRC were not sufficiently accountable for meeting the Charter requirements, noting that they would be more likely to address declining customer service if they were properly accountable under the Charter. HMRC face no penalties for failing to meet standards.

Digitalisation and transformation plans
Nearly 89% of respondents felt HMRC had not done enough to keep Charter standards central to its Transformation Roadmap and that digitalisation was being prioritised over fairness, accuracy and support.

Making Tax Digital
Probably unsurprising to anyone in business, the feedback on Making Tax Digital (MTD) was overwhelmingly negative. Respondents described it as, at best, poorly designed and generally not fit for purpose.

In complete contrast to HMRC’s ongoing trope, the common concerns included its extra cost and administration, software dependence, quarterly reporting burdens and a lack of confidence in HMRC's ability to cope with the demands of MTD.

The general feeling was that MTD was uncommercial, offered little practical value and failed to reflect or support the realities of small businesses and agents.

The other charter standards
Other charter standards scored slightly higher, although most ratings still fell slightly compared with the previous year. The scores were:

• Keeping your data secure: 6.86 (7.03 in 2025).
• Recognising that someone can represent you: 6.31 (6.01 in 2025).
• Mutual respect: 5.89 (5.98 in 2025).
• Treating you fairly: 5.25 (5.34 in 2025).

If you have any tax concerns, problems implementing MTD or dealing with HMRC, please get in contact. We’d be happy to help.
 
Insolvency Service has a busy year
The Insolvency Service has released its annual report showing stronger enforcement activity while improving support for people in debt.

Two key takeaways from the report were the increasing use of Artificial Intelligence to tackle abusive phoenixism and continued tackling of COVID-19 fraud.

Overall, the Insolvency Service returned £42.7 million to creditors and the wider economy in 2025-26. It handled 11,668 insolvency cases, processed 70,633 redundancy payments and approved 48,344 Debt Relief Orders.

Enforcement activity also increased with 1,153 directors disqualified for misconduct, an increase of 11%. There are 185 live company investigations, up 39% on the previous year, with 163 criminal prosecutions completed. 

The report showed that the Insolvency Service continued to modernise its services, including progress on a new digital Debt Relief Order service, investment in artificial intelligence and automation to improve the customer experience and the rollout of a new case management system to help investigators work more efficiently. 

The problem with COVID
In May 2025, the agency was tasked with taking over the recovery of funds lost to COVID-19 fraud. It reported that 65% of its civil and criminal enforcement outcomes related to it. The Insolvency Service admitted that it anticipated a decline in case volumes as the schemes receded, but activity has remained consistent with previous years, “… reflecting sustained investigative effort and a continuing pipeline of complex cases”.

During 2025 to 2026, there were 773 Section 6 director disqualification outcomes and 55 bankruptcy restrictions and debt relief restrictions linked to COVID-19 financial support scheme misconduct. In the same period, there were 31 criminal convictions resulting in 25 custodial sentences.

Unfortunately, only £4.5 million was recovered.

Abusive phoenixism
The agency also indicated that it had plans to do more to tackle the issue of abusive phoenixism - where directors repeatedly abuse the dissolution or insolvency process to avoid paying creditors or for fraud. This causes significant harm to creditors, honest businesses and public finances.

With an increased technology budget and a quickening rollout of Artificial Intelligence systems throughout the service, phoenixism is firmly within its sights.

It planned to spend an additional £25 million to fund 50 more staff with tech backup dedicated to director misconduct. Cross-government work includes strengthened data-sharing with HMRC and Companies House, using a combined threat assessment to catch dodgy directors.

In 2025-2026, it completed 148 civil investigations into companies where abusive phoenixism was identified and civil or criminal investigations were ongoing into a further 64 companies.

As a result of the abusive phoenix investigations, 18 companies were shut down for trading against the public interest, 87 directors were disqualified and five directors were convicted of criminal offences.

Key achievements in numbers 

• £42.7 million returned to the economy through distributions to creditors and debtors. 
• 1,153 directors disqualified for financial misconduct. 
• 70,633 redundancy payments processed for employees affected by employer insolvency.
• 48,344 Debt Relief Orders approved, helping vulnerable people access debt relief. 
• 80,542 Breathing Space protections granted to people struggling with debt. 
• A £25 million government investment announced to strengthen action against abusive phoenixism and director misconduct.
• The Insolvency Service’s full report can be found here:

https://www.gov.uk/government/publications/insolvency-service-annual-report-and-accounts-2025-to-2026/insolvency-service-annual-report-and-accounts-2025-2026
 
New settlement terms for disguised remuneration loan charge
HMRC have released new guidance for individuals who wish to settle their disguised remuneration loan charge liability under new settlement terms. HMRC will write to those who are eligible to settle under the new terms.

The disguised remuneration loan charge is a UK tax measure that applies to outstanding loans made on or after 9 December 2010 as part of tax-avoidance schemes, when income was paid as a non-repayable loan to avoid Income Tax and National Insurance contributions.

After years of rancorous litigation and political debate, an independent review was undertaken last year, with the response published in conjunction with the Autumn Budget 2025 and legislation included in Finance Act 2026.

Nine recommendations were made by Ray McCann, who led the review. Of these, HMRC accepted all but one of them.
 
New terms
The new settlement scheme applies to those who have a disguised remuneration loan charge liability that has not yet been paid in full. This includes any settlements agreed after 1 June 2021.  

The new terms include a maximum reduction of the settlement fee of £70,000 with another reduction for the scheme’s promoters' fees. All loan charge liabilities will have an automatic deduction of £5,000, with late payment interest and penalties not included in the final liability. 

Additionally, Inheritance Tax will not be collected on disguised remuneration schemes where trusts were used. 

Employers and employees
Where an employer was responsible for deducting PAYE from the loan payments, HMRC will attempt to settle the liability with them if they still exist.

HMRC will also write and make an offer directly to the employee which they can accept or refuse if the amount they owe is £0 or they wish to settle now to avoid waiting for HMRC to try to deal with the employer. If the employee does not accept the offer, they will still have the opportunity to settle under the new terms at a later date should HMRC be unable to retrieve PAYE tax from the employer. 
HMRC have already issued letters to those they believe are affected and a further letter will be issued with an offer to settle under the new terms. It will include the amount due for settlement, loan details and any other income used to calculate the settlement offer. 

Options
A caseworker will be allocated to each individual and who will discuss settlement options and payment plans before any offer is accepted. Once an offer is accepted, an acceptance form must be completed and signed, which will be legally binding. Any open enquiries will be closed thereafter. 

Even if there is nothing to pay, it is likely that HMRC will still require a formal signed acceptance of the offer and the form to be returned to them. For those who do not accept the offer, the full loan charge liability will be due.  

If an individual believes they are affected but does not yet have a caseworker, HMRC can be contacted at:  CAGetHelpOutOfTaxAvoidance@hmrc.gov.uk. 

Should you have concerns about the disguised remuneration loan charge or communicating with HMRC, please get in contact. We’ll be happy to help you.
 
Reminder for Self Assessment payments
For those sole traders and directors that have self-assessment tax commitments, the second payment on account is due by 31 July 2026.

It will be important to check what’s due and pay the bill online by the deadline. If there are problems with paying the full amount, there may be the option of using HMRC’s Time to Pay arrangement.

Payments on account are advance payments towards the next tax bill, typically 50% of the previous year's tax bill, excluding Capital Gains Tax (CGT) and student loan repayments. These are usually due in two instalments on 31 January and 31 July.

If your income has fallen, there may be scope for reducing your payments on account to avoid overpaying.

If your tax bill was under £1,000 or more than 80% was collected at source, HMRC may not need to take payments on account. 

If you need any help with payments on account, applying for a Time to Pay arrangement or applying to reduce payment on accounts correctly, please let us know as we’d be happy to help.
 
HMRC launch Advance Tax Certainty Service for major investment projects
A first-of-its-kind service for the UK has been launched to provide tax certainty to businesses planning to invest in major projects.
HMRC have launched the Advance Tax Certainty Service to provide clarity on how UK tax rules will apply to major investment projects before project commitment. Businesses planning to invest £1 billion or more in qualifying UK expenditure over a project's lifetime will now be eligible to apply for certainty on key tax issues.

The government hopes that this assurance will help companies to invest with confidence in the UK. The service covers the following
UK taxes and schemes:

• Corporation Tax.
• VAT.
• Stamp Duty Land Tax.
• Income Tax.
• PAYE regulations.
• Construction Industry Scheme.

24th July 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

How safe is your LLP tax position?
The Supreme Court has put companies with Limited Liability Partnership (LLP) structures on notice that their business arrangements must comply with strict tax legislation.

Under LLP rules, members are generally treated as self-employed for income tax and national insurance contribution purposes.

However, the salaried member rules, introduced in 2014, mean that members need to meet certain conditions to be able to benefit from this tax treatment.

In a notable recent court case, HMRC v BlueCrest Capital Management (UK) LLP, the Supreme Court upheld the Court of Appeal's decision that in assessing these conditions, only ‘influence’ deriving from legally enforceable rights and duties should be taken into account and not ‘de facto’ influence arising from other arrangements. This is a narrower interpretation of the rules than had previously been understood to be the case. 

BlueCrest Capital Management, a hedge fund, had been challenging HMRC’s attempts to tax dozens of its partners as employees but lost in the Supreme Court, and may owe some £200 million.

The decision could have repercussions for many professional services and investment firms that use the LLP business structure.

Now is the time for LLPs to review their member agreements and governance frameworks.

How does the salaried member rules work?
The case hinged on one of three conditions that must be met for the salaried member rules to apply, that of ‘influence’.

The three conditions that must all be met for the rules to apply are:

• Condition A: Broadly, at least 80% of the members' reward is ‘disguised salary’, i.e. fixed or variable, without regard to the overall profits of the LLP.
• Condition B: The mutual rights and duties of the members of the LLP do not give them 'significant influence' over the affairs of the LLP. 
• Condition C: The member's capital contribution is less than 25% of their disguised salary.

While HMRC failed in two earlier tax tribunal cases, the Court of Appeal (CoA) set aside those decisions, finding the tribunals had erred in law in accepting the wider construction of ‘influence’ set out in HMRC’s published guidance. In assessing Condition B, only 'influence' deriving from legally enforceable rights and duties of members should be taken into account and not 'de facto' influence arising from other arrangements.

The Supreme Court says
The Supreme Court agreed with the lower courts that the BlueCrest members met Condition A, pointing out that the purpose of the condition is to distinguish between what is typical remuneration for a partner and a typical remuneration for an employee. Most of the BlueCrest partners' remuneration was 'disguised salary'. It did not reflect a share in the profits and losses of the partnership as a whole; it was referenced to the profits generated by the partners themselves or by their team.

Condition B – significant influence
The Supreme Court agreed that the Court of Appeal's narrower interpretation of Condition B was correct, and 'significant influence' concerned legally enforceable rights and duties of members under the LLP agreement. The court found that informal influence derived from members’ strong performance, personal qualities or relationships is not relevant.
Significant influence over the affairs of the LLP requires influence, not control. ‘Significant’ means a degree of influence that has commercial substance in the conduct of the LLP’s affairs and must be exercised over the partnership's business as a whole, not parts of it.

This suggests that a person could only have such influence if they have a voice in the management of the LLP's affairs, such as participating in or influencing high-level or strategic decisions. Day-to-day decision-making at a purely operational level is less likely to qualify, especially if that is only in relation to part of the business.

Do you need to reassess your Partnership Agreements? If you are unsure of your LLP structure and tax position, contact us. We’d be happy to help.
 
Can you stay afloat? The impact of flooding on UK firms
The Bank of England has produced a working paper examining the impact of flooding on businesses, identifying it as the UK’s largest source of physical climate risk and costing the country an average of £2.2 billion annually.

Nearly one in ten UK business premises are located on floodplains, making them vulnerable to flood events that can damage assets, disrupt operations and strain local economies. As climate change increases the frequency and severity of extreme weather, understanding which firms are most exposed and how floods affect their performance is crucial for regional resilience and productivity.

Data and methodology
The Bank of England study used datasets linking business premises addresses in England and Wales to flood maps and firm-level financial records. The data spans the years 2011–2021 and covers 1.4 million firms and 1.7 million business premises.

The research identified which regions, sectors and types of firms are most exposed to flooding.

Concentrated exposure
Flood risk is not evenly distributed. Exposure is highest in specific regions (notably the North East and Cumbria) and in natural resource-intensive sectors such as Utilities and Agriculture. Larger business premises are significantly more likely to be located in medium to high-risk flood areas, often due to a search for cheaper land, which is frequently found in flood-prone zones.

Impact on company survival and performance
Flooding has severe consequences for UK firms:

• Small and Medium Enterprises (SMEs): Floods increase the likelihood of business termination by 32% for small firms and 43% for medium firms in the year of the event. Repeated flooding raises the risk even further for small firms.
• Surviving firms: Those that endure floods experience sharp declines in turnover, employment and total assets in the year of the event, with only partial recovery over the following three years. Large firms and those in natural resource sectors suffer the most significant losses.
• Liquidity and credit: For SMEs that survive, floods cause a modest but persistent deterioration in liquidity, mainly due to reduced inflows. There is limited use of credit for recovery, and collateralised borrowing drops about a year after the event, possibly due to tighter lending standards or reduced collateral values.

Aggregate economic impact
Direct flood effects have reduced annual UK corporate turnover by an average of 0.18% over the past 11 years, peaking at 0.9% in 2015. These figures likely underestimate the true economic cost, as they exclude second-round effects such as reduced consumption and investment.

Policy implications
Flood risk is heavily concentrated in regions and sectors critical to the UK economy. As climate change intensifies, the vulnerability of these areas could have broader implications for national productivity and resilience. Policymakers should prioritise targeted flood defences, support for SMEs, and strategies to mitigate the economic fallout from increasing flood events.

What can your company do?
As flooding poses a significant and growing threat to UK firms, especially SMEs and those in natural resource sectors, companies should assess the level of their risk.

1. Assess your specific risk: Identify your exact vulnerability by consulting local government tracking systems, such as checking postcode risk zones via the Environment Agency flood maps.
2. Register for early alerts: Companies and individuals can sign up for free for the government’s automated flood warning services.
3. Draft a business continuity plan: Outline actionable emergency procedures, including lists of critical suppliers, staff contact details and production and IT recovery workflows.
4. Examine your insurance coverage: Review your business and premises insurance for flood damage and prolonged business interruption.
5. Shift critical assets higher: If your business is in an area prone to flood risk, move electrical sockets, servers, vital company documents and high-value inventory at least one metre above floor level. Store important data in off-site cloud backups.
6. Install physical property defences: In some circumstances, it may be possible to deploy property-level protection by fitting purpose-built flood doors, air-brick covers, and removable, standalone perimeter barriers.
7. Implement site drainage improvements: Reduce water runoff around the property by utilising permeable paving for car parks, installing green roofs and regularly clearing surrounding storm drains.
8. Plan for post-flood recovery: Develop a detailed post-flood cleanup and repair checklist. This should include procedures for safely removing contaminated water and protocols for safe equipment power-up.

The Bank of England report can be found here: https://www.bankofengland.co.uk/working-paper/2026/staying-afloat-the-impact-of-flooding-on-uk-firms

To check Scottish flood maps, see: https://map.sepa.org.uk/floodmaps

To check Northern Ireland flood maps, see: https://www.nidirect.gov.uk/articles/check-risk-flooding-your-area

To check Welsh flood maps, see: https://naturalresources.wales/flooding/check-your-flood-risk-by-postcode/?lang=en

To check England's flood maps, see: https://flood-map-for-planning.service.gov.uk/
 
Early adopters of AI see rising headcounts
New research out of the United States contradicts predictions that the introduction of Artificial Intelligence (AI) will drive job losses.

The working paper found that companies that adopted generative AI grew their headcount by 10.2% over the two years following adoption. This is in stark contrast to comments from tech companies Oracle and Atlassian, which have cited AI investment when announcing layoffs. 

Companies making the largest AI investments saw entry-level headcounts growing 12% over the two years following adoption.

Yet the research has several stipulations; this increase in headcount only applied to companies defined as ‘high-intensity’ adopters.
Many of those companies that saw benefits were high-growth firms, usually larger, more engineering-intensive and more likely to be venture-backed.

The research defined ‘high-intensity’ companies as those in the top third of per-employee, per-month AI spend in the first three months. Usually, the spend was on multiple AI models, primarily the most advanced and productivity-enhancing systems, in areas like coding agents rather than simpler chat subscriptions.

Paradoxically, the spending in the top third of companies was fairly low, about $30 per month, per employee and then increasing. 

The study also found that increased employment did not happen immediately. There was generally a six to 12-month hiatus before increases, partly because it took time for AI best practice to filter across the organisation.

The working paper, ‘A New Look at AI’s Impact on Jobs,’ used company-level spending data from US tech start-ups Ramp and Revelio Labs. Ramp joined with workforce data collected by Revelio Labs for more than 21,000 U.S. firms.

The research paper can be found here: https://ramp.com/data/ai-jobs-impact/paper
 
UK hiring trends
The June 'UK Report on Jobs' shows subdued business confidence driving a preference for short-term staff. Temporary staff billings rose at the steepest rate in over three years, while permanent staff appointments continued to decline, although at a much slower pace than in May. 

Overall demand for staff weakened at a quicker rate, largely reflecting a steeper reduction in permanent job vacancies. At the same time, an increase in redundancies contributed to a further marked increase in candidate availability. Despite this, pay trends improved, with employers raising starting salaries and wages at a faster rate as they sought to attract and secure candidates with sought-after skills.  

The KPMG and REC, 'UK Report on Jobs' is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

The latest survey data showed that the number of people placed into permanent positions fell at a marginal pace - the softest in three months, while temp billings rose at the quickest rate since April 2023. These trends were often linked to wider economic uncertainty and cost considerations, which have driven a greater preference for short-term staff and projects.

UK recruitment consultancies signalled further increases in the rates of starting pay for both permanent and temporary workers at the end of the second quarter as efforts to attract top talent had placed upward pressure on pay offers.

Nursing/medical/care and engineering were the only two monitored sectors to see improvements in demand for permanent staff in June. Retail, meanwhile, posted the sharpest reduction in permanent vacancies.  

Temp vacancies rose sharply in the blue-collar sector and solidly in the engineering sector. Of the eight other monitored areas that posted a reduction in temp staff demand, the most dramatic falls were seen in the Retail, Nursing/Medical/Care and
Executive/Professional categories. 
 
Proposed offence for reckless, untrue tax statements
HMRC have proposed a new criminal offence for making reckless, untrue statements or declarations about what's known as 'direct taxes' - Income Tax, National Insurance and the like. For Customs and Excise and VAT ('indirect taxes'), it is already possible to prosecute individuals who make untrue statements or submit incorrect documents either knowingly or recklessly, without the need to prove dishonesty. The penalties for such offences can be severe, including substantial fines and imprisonment. The direct tax regime does not currently contain an equivalent offence.

It is proposed that the offence would carry a custodial sentence and/or a fine on indictment, to be decided by the courts. Consideration is being given to following the Customs and Excise rules, which include a maximum sentence of two years and unlimited fines. This differs from the provisions for VAT rules, which provide for a potential custodial sentence of up to 14 years.

HMRC are looking for views on the proposals, which include examples of what they consider to be reckless errors. These proposals include:

• Making a significant relief claim without reading the relevant guidance properly or seeking advice or clarification on the basis that it will 'probably be fine'.
• A self-employed taxpayer who prepares their own tax return knows they have multiple bank accounts and suspects they have received taxable income therein. They do not check the statements and estimate income for the main account only, omitting income from secondary accounts. They unintentionally file a materially inaccurate tax return.

The document does make the point that carelessness would not be caught in this net, and 'deliberate behaviour' would be covered by existing penalty legislation.

The consultation can be found at https://www.gov.uk/government/consultations/proposed-offence-for-reckless-untrue-statements-direct-taxes/introducing-a-criminal-offence-for-making-reckless-untrue-statements-or-declarations-in-direct-tax--3#summary
 
New proposals to tackle Electronic Sales Suppression
The government is consulting on potential measures that target Electronic Sales Suppression (ESS). Proposals include the introduction of new software standards for Point of Sale systems. Electronic Sales Suppression (ESS) involves businesses using software or devices to manipulate Electronic Point of Sale (EPOS) systems to hide transactions and evade tax.

While precise quantitative prevalence statistics are inherently difficult to capture for hidden fraud, ESS has been regarded by HMRC as a growing area of tax evasion.

HMRC have identified that certain individuals and businesses in Electronic Point of Sale (EPOS)/Mobile Point of Sale (MPOS) supply chains are developing or modifying POS systems to suppress sales to facilitate tax evasion. HMRC believe that ESS is more prevalent in small retail, takeaway and hospitality businesses.

The government is proposing to introduce software standards for the EPOS and MPOS sector, consisting of a set of uniform rules, protocols and compliance requirements to ensure that every system records sales and financial data accurately, securely and in a way that cannot be easily tampered with or manipulated.

The proposed measures include requiring an unalterable and complete transaction log that contains details of every individual transaction and adjustment, indelibly linked together in an encrypted chain using the Standard Audit File for Tax (SAF-T) format to store sales records. 

The government would also establish a register of EPOS/MPOS systems sold, transferred, or used in the UK. A certification system would show whether the software complies with the new standards. It would also make it compulsory for small retail, takeaway and hospitality sectors to use compliant EPOS/MPOS systems to record all sales.

17th July 2026 – Hillmans Weekly Update

17th July 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

Expansion of SME growth scheme
The Chancellor, Rachel Reeves, has announced an expansion of the British Business Bank’s (BBB) Growth Guarantee Scheme (GGS). This provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, cutting credit risk.

The changes will enable the scheme to scale up with an additional £2 billion of Small to Medium-sized Enterprises (SME) lending per year by 2028/29. This will bring the total lending supported through the scheme to £3.35 billion per year, more than double the current £1.35 billion.

It will also increase the maximum term length of a loan from six to 10 years for loans of up to £1.1 million and increase the maximum size of businesses eligible for a loan under the scheme from £45 million in annual turnover to £54 million.

The British Business Bank estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150% increase on the 8,000 currently being supported, bringing the total to 20,000. Since its launch in 2022, the scheme has delivered over £3.7 billion of financing to UK SMEs, with £2.5 billion of this reaching businesses outside of London and the Southeast.

It is claimed that every £1 spent on the scheme is estimated to support around £10 of lending by banks.
 
Apply for Digital Twin Adoption Accelerator 2026
A programme that pairs Small and Medium-sized Enterprises (SMEs) with industry partners to build and test digital twin solutions for business problems is now open to applicants. Successful projects will also receive up to £100,000 in Innovate UK grant funding.

Participants will take part in a nine-month programme designed to accelerate the adoption of new technologies. It teams an SME industry adopter with a technology vendor in the areas of Automotive, Agri-tech, Maritime, Aerospace, Space, Defence, Clean Energy, Creative and Life Sciences.

It is organised by Digital Catapult, the UK innovation agency for advanced digital technology, developed in conjunction with Innovate UK. The lead applicant and co-applicant of the programme may be a representative from either the industry adopter or the technology supplier.

What the programme offers
Participants in the programme will get technical support from Digital Catapult and access to facilities and real-world testing environments. There will be one-to-one mentoring throughout the programme with opportunities to collaborate with industry partners. There will also be a final showcase event for industry, government and investors.

Who can apply
Applications must be from pre-formed partnerships between a UK-based technology SME developing digital twin capabilities (for example, in data services, cyber-physical systems or AI) and an industry organisation looking to adopt solutions.

Applicants must be a UK-registered company and have a demonstrable idea or solution to fit within the Digital Twin Technology Stack. 

They must be a partnership between a technology vendor and an industry adopter in automotive, agri-tech, maritime, aerospace (including space), defence, clean energy, creative and life sciences sectors and be available for the full programme duration over November and July and attend 75% of the workshops.

Applicants must also be within State Aid allowances. The deadline for applications is 6 September 2026.

More details, including links to FAQs, can be found on the Digital Catapult

website: https://dc.simplydo.co.uk/challenges/6a2c015ed41734038ed68628
 
Changes planned for modernising company taxation on capital distributions
HMRC have opened a consultation, ‘Modernising the taxation of distributions and repayments of capital from companies’. They are seeking views on proposals to modernise the tax framework dealing with distributions made by companies to shareholders who are individuals or trusts.

The consultation explains that there are seven areas of the distribution rules where HMRC consider that the legislation has not kept pace with commercial practice. It has remained largely unchanged since Corporation Tax was introduced in 1965. These are:

• Reduction of capital.
• Demergers.
• Income Tax treatment of distributions from non-UK resident companies.
• Interaction between debt, loans and the distributions legislation.
• Loans and other temporary extractions from non-UK resident companies.
• Purchase of own shares rules.
• Updated capital extraction anti-avoidance in respect of Transactions in Securities (TiS).

Financial or commercial extractions that do not fall within Income Tax (IT) often result in capital distributions, which are instead subject to Capital Gains Tax (CGT). This affects both the amount of the extraction that is taxed and the tax rate at which it is charged. The result is that economically similar payments to a shareholder can be taxed inconsistently. The proposed changes seek to address this.

Proposals
The consultation proposes that share buybacks and other returns of capital will reflect a ‘frozen’ amount of capital on the shares in any future holding companies at the amount subscribed on the original investment. This is to prevent a shareholder who does not meet the conditions for a purchase of their own shares from extracting capital by inserting a holding company and later implementing a capital reduction to withdraw funds at CGT rates.
It also proposes removing the capital reduction demerger route of restructuring a company or group, with a corresponding relaxation of the statutory demerger rules to allow the rules to apply to investment businesses and non-UK resident companies.

The distributing company could be dissolved post-distribution, provided that it contains no assets.

A statutory demerger route could be available to help the onward sale or change of control of the demerged business, or a cessation of trade. This would only apply if these events took place at least five years after the demerger transaction.

There could be new conditions for a company's purchase of its own shares, including that the selling shareholder must have held at least a 5% shareholding for two years before the transaction and have worked for the company throughout that period. This would be extended to five years, where the selling shareholder retains family connections with remaining shareholders and directors, with capital treatment being withdrawn if they return as a shareholder or director within five years.

There would be no retention of a small holding for sentimental reasons.

The company must also take reasonable steps to ensure that the consideration paid for the shareholding does not exceed the market value.
There are also proposals to bring more types of payment on foreign shares within the IT regime, including stock dividends, the transfer of assets or liabilities between the member and the company and certain issues of bonus shares.

It is proposed that there be a closer alignment of the loan to participators and distribution rules to provide greater clarity, including clearly setting out which rules take priority.

Proposals also include a charge under the loan to participators rules for loans from non-UK companies, which would be close companies if they were UK resident. This would likely fall on the UK resident individual.
It is suggested that an amendment or replacement of the TiS rules be made with an updated anti-avoidance regime. The new regime would tackle scenarios where a taxpayer is party to arrangements that enable them to extract value from a company and avoid paying tax.
Responses to the consultation can be emailed to distributionsreform@hmrc.gov.uk. The consultation ends on 14 September 2026. 
Should you be unsure of your tax position and would like advice on any capital distributions you are thinking about from your company, please get in touch. We’re here to help.
 
NAO says employer confidence is critical to construction skills package's success
The government has promised a package of reforms for the construction industry, but a new report from the National Audit Office has warned that its success could be at risk.

The government’s ambitions to build 1.5 million homes, upgrade home energy standards and deliver a £725 billion long-term infrastructure pipeline will depend on a significant expansion of the construction workforce.

There must be a stronger employer involvement in training the next generation of workers for it to work. The NAO warns that employers continue to be affected by challenging economic conditions that could put the success of the skills package and wider building commitments at risk.

The watchdog examined the government’s progress in delivering its £625 million construction skills package, announced in March 2025, which aims to support up to 60,000 more construction workers by 2029. The package combines tried and tested initiatives alongside newer ideas, including Skills Bootcamps, new foundation apprenticeships and construction technical excellence colleges.

The NAO points out that there are flaws. The package is not designed to meet all future workforce needs, with government estimates showing that between 201,000 and 755,000 extra workers could be required by 2030, before accounting for those who leave the sector for other jobs.

This comes as statistics show the construction sector had the highest rate of hard-to-fill vacancies due to skills shortages - 45% compared with a 27% national average.

Businesses make recruitment and training decisions depending on the expected pipeline of work, costs and market competition. Tough economic conditions are affecting employers’ confidence to invest and take on new employees and apprentices. In 2024, employer investment in training per construction trainee was at its lowest level in 10 years.

The National Audit Report could be found here: https://www.nao.org.uk/reports/increasing-construction-skills/

Free, hands-on cyber consultancy available for SMEs
Cyber Advisors are offering free 30-minute consultations to help small businesses get started with cybersecurity.

As smaller businesses become more frequently targeted, the National Cyber Security Centre (NCSC) is reiterating the need for them to be more robust in their approach to digital security. It’s aware that investing in cyber security can seem more like a costly distraction than a priority for smaller companies as they concentrate on keeping customers happy, managing cash flow and day-to-day business.

The NCSC points to the statistics. In 2025, 65% of medium and 46% of small organisations reported a cyber breach or attack. The problem is that Small to Medium-sized Enterprises (SMEs) see cybersecurity as too complicated, too expensive and don’t address the real-world risks that small businesses face.

Many Cyber Advisors are now offering a free 30-minute consultation for SMEs that are looking to get started with Cyber Essentials, the government's baseline for cybersecurity.

This no-strings-attached introductory consultation provides businesses with an opportunity to ask questions and get an explanation of how the five steps that make up Cyber Essentials can be applied to your organisation using practical, achievable implementations.

The National Cyber Security Centre (NCSC) introduced Cyber Advisors in 2023, a network of cybersecurity consultants who’ve been assured by the NCSC to work specifically with smaller organisations. 

More information on the free consultation can be found here: https://iasme.co.uk/cyber-advisor/free-advice/
 
HMRC is watching you
Companies and individuals that are careless or even illegal in their tax affairs need to watch out. New figures show that HMRC has paid out £1.4 million in rewards to whistleblowers of tax illegality.

A record number of reports were made to HMRC in the 2025-26 tax year, hitting 170,992.

The last Budget saw the government strengthen a reward scheme for tip-offs. Payouts only go to tips that lead HMRC to recover more than £1.5 million in tax. Informants now receive between 15% and 30% of the value of the extra tax collected.

Recent HMRC figures on the tax gap - the difference between the tax owed and the amount actually collected – showed that small businesses made up the largest share of uncollected tax, two-thirds of the £59.2 billion shortfall.

HMRC have also just released a two-minute YouTube video as a ‘general explainer’ on the scheme. It is aimed at employees, family members, friends or acquaintances of high-net-worth individuals or businesses engaged in suspected serious tax evasion or avoidance. It sets out what the scheme is, what rewards eligible informants could receive and how any information provided may help HMRC to tackle the tax gap and fund vital public services.
The video can be found here: https://www.youtube.com/watch?v=wsmzQR-Uhqc

Should you be unsure of your tax position and need advice, please get in contact. We’re here to help.
 
Rules of Origin under the UK-India Free Trade Agreement
The new UK-India Free Trade Agreement (FTA) promises to create new opportunities for businesses to strengthen trade links with India, according to the government.

To benefit from the agreement's preferential tariff rates, it is important to understand the rules of origin, which determine whether goods qualify for preferential tariffs. Businesses must also register with HMRC if they are planning to complete origin declarations for exports under the FTA.

Businesses should be aware that it's not all good news. While the FTA is between the world's fifth and sixth largest economies and removes or reduces tariffs on 99% of Indian exports to the UK and 90% of UK imports into India, the details are complex.

Trade experts believe that the overall impact of the deal could be incremental rather than transformational.

Data reported by the BBC show that India exported $13.4 billion worth of goods to the UK in 2025-2026, but more than half of these exports already came into the UK duty-free under its most favoured nation regime. On the import side, India imported $11.7 billion from the UK, but over 45% consisted of silver.

What are the Rules of Origin?
Rules of origin determine whether a product is considered to originate in the UK or India for trade purposes. Only goods that meet the agreement's rules of origin are eligible for the preferential tariff rates. Businesses need to review their supply chains, sourcing arrangements and origin documentation to ensure they are ready to benefit when trading under the agreement and benefit from reduced or zero tariffs.

If your business exports goods to India or is exploring new opportunities in the market, the government recommends checking whether the products meet the rules of origin requirements and registering with HMRC to complete origin declarations.

If you do not register, your origin declarations will be rejected, and your importer will not be able to claim the preferential tariff rates available under the agreement.

To find out more, go to: https://www.gov.uk/guidance/register-to-complete-origin-declarations-under-the-uk-india-free-trade-agreement
 
New UK investment fund
Investors representing over $3 trillion of assets under management from across North America, the Gulf, Asia and Australia will participate in InvestConnect, a new UK investment fund. Aimed at connecting the UK’s nations and regions to trillions of pounds of global capital, the new platform was developed in consultation with professional investors, government partners and the UK's nations and regions.

Touted as “... a trusted, AI-enabled platform”, somehow the technology will help “... package opportunities, standardise information and connect global capital with credible UK investment opportunities”.

Launched at the Chancellor’s annual Mansion House dinner, the new digital in vestor-led platform is being developed by InvestConnect Global Limited in partnership with the City of London Corporation. Cornwall Council, the Scottish Government and Liverpool City Region Combined Authority have become the platform's first Founding Opportunity Partners.

The argument is that while there is a global appetite to invest in the UK, opportunities have been seen as fragmented and inconsistently presented, making them difficult for investors to access and compare.

The new investment platform is expected to launch in Autumn 2026 and will initially focus on large-scale infrastructure and real asset opportunities, typically representing transactions of £100 million or more. 

🌟Client Spotlight🌟: Need Professional 2D Drawings for Your Business?
Orust Projects supports businesses that need clear, accurate and compliance-ready 2D drawings without the overhead of employing in-house staff or the cost of appointing an architect. They turn concept ideas, compliance audits and site challenges into practical drawings that teams can actually use, providing a far clearer visual representation than relying solely on signs or written text.

They have produced drawings for a wide range of commercial properties, helping clients with facilities management, planning improvements, preparing for inspections and documenting their sites accurately.

Orust Projects is currently looking to take on new clients and offers a wide range of 2D drawing services, including:

• Compliance drawings for audits, with layered information presented clearly and logically.
• Fire zone charts, working alongside BAFE-accredited contractors.
• Factory and site layouts for operations, planning and workflow improvements.
• Flow diagrams for processes, hygiene routes and production sequencing.
• Incident control drawings.
• Building and site services layouts.
• Wall type drawings, including composite panel identification for fire and insurance reviews.
• Proposed layouts and expansion concepts to help visualise future plans.
• Professional drawings, sketches and illustrations for reports.
• General “ideas on paper” to explore options before committing to a project.
• Printing of A1 drawings.

If you have an upcoming project or would like to find out more, please visit www.orustprojectsltd.co.uk or email chris@orustprojectsltd.co.uk.

10th July 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

MANDATORY PAYROLLING OF BENEFITS IN KIND: PHASED INTRODUCTION CONFIRMED
HMRC has confirmed that mandatory payrolling of benefits in kind (BiKs) will now be introduced in two phases, starting from 6 April 2027. This change will move the reporting of most benefits away from annual P11Ds and into real-time payroll, resulting in Income Tax and Class 1A National Insurance being reported through the payroll each pay period (e.g. weekly or monthly).

From April 2027, the first phase will apply to:

• Company cars and car fuel
• Vans and van fuel
• Employer-provided medical benefits.

From April 2028, most other benefits will be brought into the regime, although beneficial loans and employer-provided living accommodation will remain voluntary.

Under the new system, employers will report benefits through payroll each pay period using RTI, rather than reporting them after the year end. While this change will reduce the need for year-end forms, it increases the importance of getting payroll right throughout the year. Errors will be picked up more quickly, and corrections may need to be made in real-time.

There is still time to prepare. HMRC is continuing to work with software providers and will release further technical guidance during 2026, with final details expected ahead of the Autumn Budget.

Employers should start planning now. Review the benefits you currently provide and identify which will fall into the first phase.  This is a significant shift in how benefits are taxed and reported. Preparing early will reduce disruption and make the transition much smoother.
Please get in touch if you would like help reviewing your benefits or preparing your payroll systems for these changes.
 
VAT AND PUBLIC ELECTRIC VEHICLE CHARGING POINTS
HMRC have published 'Revenue and Customs Brief 4 (2026): VAT liability of supplies of electricity from public electric vehicle charge points'. This explains HMRC’s position following the First Tier Tribunal (FTT) decision in Charge My Street Ltd v HMRC, where the FTT decided in favour of Charge My Street Limited, finding that electric vehicle charging supplied at public charging stations qualified for VAT reduced rating.HMRC have applied for permission to appeal the FTT’s decision, and their view remains that charging electric vehicles at public charge points is standard-rated for VAT.
 
Supplies of fuel and power to domestic premises are subject to the reduced rate of VAT at 5%.

HMRC’s long-standing policy is that electric vehicle charge points located in public areas do not qualify as domestic premises and the standard rate of VAT applies to the supply of electricity at these locations.
 
The FTT ruling does not set a legal precedent, however, and HMRC’s policy means that there is VAT-rate disparity between electricity used to charge vehicles at home and electricity used to charge vehicles at public charging points.
 
ADVISORY FUEL RATES FOR COMPANY CARS
 
The table below sets out the HMRC advisory fuel rates from 1 June 2026. These are the suggested reimbursement rates for employees' private mileage using their company car.
 
Where the employer does not pay for any fuel for the company car, these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.
 
Advisory Fuel Rates
 
* Petrol
    * 1400cc or less: 14p per mile (12p)
    * 1401cc to 2000cc: 17p per mile (14p)
    * Over 2000cc: 26p per mile (22p)
* Diesel
    * 1600cc or less: 15p per mile (12p)
    * 1601cc to 2000cc: 17p per mile (13p)
    * Over 2000cc: 23p per mile (18p)
* LPG
    * 1400cc or less: 11p per mile (10p)
    * 1401cc to 2000cc: 13p per mile (12p)
    * Over 2000cc: 21p per mile (19p)
 
Previous rates are shown in brackets.
 
You can also continue to use the previous rates for up to 1 month from the date the new rates apply.
 
Note that for hybrid cars, you must use the petrol or diesel rate.
 
For fully electric vehicles the rate is 7p (7p) per mile where the vehicle is charged at home. The rate applicable to vehicles charged using public facilities is 15p (15p) per mile.
 
Employees using their own cars
For employees using their own cars for business purposes, the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate was increased on 6 April 2026 to 55p per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25p per mile thereafter. Note that for NIC purposes the employer can continue to reimburse at the 55p rate regardless of mileage as the 10,000 mile threshold does not apply.
 
Input VAT
Within the 55p/25p AMAP payments, the amounts in the above table represent the fuel element. The employer is able to reclaim 20/120 of the fuel amount as input VAT provided the claim is supported by a VAT invoice from the filling station. For a 1500cc diesel-engine car, 2.5 pence per mile can be reclaimed as input VAT (15p x 1/6).

3rd July 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

What Burnham’s rule could mean for the UK
Not yet elected, the new MP for Makerfield, Andy Burnham, is seen as a shoo-in as our new Prime Minister. A politician with the success of growth in Manchester and his ‘man of the people’ persona, he is the very antithesis of Sir Keir Starmer.

After months of Labour Party pressure, a failing public image and a series of policy rollbacks, Sir Keir Starmer resigned as Prime Minister and opened the door for a so-far uncontested Mr Burnham to take leadership.

So far, there has been a lack of detail on policies, save that he will follow the Labour Manifesto. Perhaps this is unsurprising as he is still officially in a Labour leadership campaign, but past statements and his Manchester policies point to what he might want to achieve.

The most important commitment Mr Burnham had made so far was his pledge to pursue electoral reform after the next election with a form of proportional representation, perhaps based on the transferable vote system found in Northern Ireland.

The financial market’s view
Whoever is Prime Minister will find that the same fiscal rules, which Mr Burnham has undertaken to follow, leave limited options for increased spending.

Usually, as Prime Ministers resign, the foreign exchange and bond markets react unfavourably, especially if they view the next incumbent as bad for business. So far, the bond markets have not reacted to a Prime Minister Burnham, a sign that the City of London is willing to give him a chance,

In part, the City and the markets have given him a chance because his unofficial economic advisers have big reputations. Andy Haldane, the former Bank of England chief economist and Lord Jim O’Neill, a former Goldman Sachs chief economist, have stepped up to help him.

He has also backtracked on his more controversial statements, such as when he told the New Statesman in September 2025 that, “We’ve got to get beyond this thing of being in hock to the bond markets.”

Two days later told the FT, “People have deliberately misinterpreted my comments about the bond markets.”

Policies
While Mr Burnham has floated policy ideas, his detractors who know him have called him a ‘weathervane’ and ‘conflict-averse’ and the new ideas may simply disappear.

“Andy wants to be loved and avoids making difficult decisions,” said one.

Devolution
He has been vigorous in his support of devolution and plans to set up a new ‘devolution department’ in Manchester, along with a ‘Northern No 10’. Its aims are to boost regional growth and shift power out of London and Whitehall.

He is also thought to be considering breaking up the Treasury despite warnings that this would lead to huge disruption, requiring staff to apply for new jobs.

This devolution of decision-making will also see capital spending diverted from the south-east.

He points to the success of the decisions he made as mayor in Manchester that saw the city produce twice the growth rate as the rest of the country, along with housing and transportation improvements. He aims to use the same model for housing strategy, direct housing investment funding and coordinated affordable housing programmes elsewhere in the UK.

On the other hand, most economists who have studied the impact of devolution have not identified any significant increase in overall economic growth rates in Scotland, Wales and Northern Ireland over the past 25 years.

Small businesses and pubs 
Mr Burnham has called some of Labour’s policies on small businesses ill-considered. He has touted a cut to business rates for pubs and music venues of 20%. Certain small family-owned businesses, such as cafes and shops, could see rates abolished altogether.
These policies would be paid for through higher levies on warehousing giants such as Amazon.

Pensions
Although there are signs that he might look at cutting some social security bills, he has promised to leave the ‘triple lock’ on the state pension in place.

After years of supporting the £10.5 billion compensation for the Waspi women, those born in the 1950s who lost thousands of pounds each after not being properly informed of a rise in the state pension age, he has backtracked and ruled it out.

Young people and welfare spending
He has said that he will lower welfare spending, a policy that Lord Jim O’Neill believes is critical for growth rather than increasing taxes.
In particular, he supports the Milburn Review into young people's employment outcomes. The 2026 Milburn Review by former Cabinet minister Alan Milburn warned that nearly one million young people (16–24) in the UK are Not in Education, Employment, or Training (NEET).

The review condemned this as a ‘record of failure’ and argued structural issues are trapping young people on benefits instead of helping them work, something that Mr Burnham has promised to rectify.

Taxes
Mr Burnham has confirmed manifesto commitments not to raise the rate of the three biggest taxes, but talking to the Daily Telegraph last year, he said there was ‘definitely a case’ to increase the additional rate of income tax to 50p, up from the current 45p.

He has also pushed the Chancellor, Rachel Reeves, to introduce a 10p band for the lowest-paid workers. It currently stands at 20% on incomes between £12,571 and £50,270.

It is unlikely that Corporation Tax or employer National Insurance Contributions will be reduced.

Housing
The provision of housing seems to be a primary target for Mr Burnham, but it is social housing, rather than affordable homes, that he seems keen on.  

He has floated a few ideas for financing, including shifting the government’s existing £39bn affordable housing programme entirely to council housing. Another is using the UK’s national wealth fund to provide seed funding to new regional banks, along with private investment, for a programme of new council homes

Additionally, revenue would be raised by shifting away from council tax to a land value tax. A land value tax is an annual levy on the market rental value of land.

His background
Andy Burnham, 56, has already lost twice in the run for the Labour leadership in 2010 and 2015. It followed stints in cabinet under Sir Tony Blair, where he was number two in the Treasury and as health secretary under Gordon Brown.

He has comfortably won three mayoral elections in Greater Manchester since 2017.
 
Britain's yearly £44m health & safety violations bill
A new Freedom of Information (FOI) request has discovered that health and safety violations cost British employers over £44 million per year. The Health and Safety Executive (HSE) revealed that serious breaches have resulted in an increasing number of prosecutions between 2023 and 2025.

The figures show that between 2021 and 2025, the average annual fines to businesses averaged £44.1 million a year, with 2025 showing a slight decline to £40.9 million. In contrast, the number of serious breaches resulting in prosecution charges increased over the last three years, rising from 428 in 2023 to 446 in 2024 and 496 in 2025.

These numbers are expected to increase in 2026. Prosecution charges are brought against companies, owners and directors when an investigation is in the public interest and reveals a serious breach of regulations.

The FOI request came from Breathe HR, experts in human resource management and compliance supporting Small to Medium-sized Enterprises (SMEs). It warns that as costs continue to rise for small businesses, a health and safety violation could financially cripple a company.

Construction firms accounted for 38% of prosecution charges last year, the largest sector.

Phil Coxon, Managing Director at Breathe HR, said, “Reviewing health and safety policies and risks might not be the most glamorous task on employers’ to-do lists’, but our research shows it’s not something leaders can afford to overlook." 

Good health and safety policy
His company recommends several general steps that businesses should take to remain compliant.

• Create a health and safety policy, review it regularly and store it somewhere safe and easily accessible for employees.
• Appoint one clear 'competent person' responsible for health and safety overall. Ensure there’s clear day-to-day responsibility at each site or location.
• Complete suitable and sufficient risk assessments for all workplaces, sites and activities. Review them regularly. 
• Be ready to show evidence of what you’ve done for audits, insurers or client requests. Keep accurate and contemporaneous records, including tracking incidents.
• Make sure employees know and understand the company's policy on health and safety. Display a health and safety law poster at each working location.
• Carry out regular risk assessments and put controls in place to address hazards. 
• As well as a well-thought-out first aid policy, be aware of employees' well-being. Employers have a duty of care and must do everything they reasonably can to support health and wellbeing.

Other recommendations for specific risk can be found on the Breathe HR website. https://www.breathehr.com/en-gb/resources/health-and-safety-basics-a-checklist-for-smes

Small businesses account for two-thirds of Britain’s tax shortfall
The latest figures from HMRC reveal that the Treasury had a substantial £59.2 billion shortfall from unpaid taxes for the tax year 2024-2025. The 'Measuring tax gaps 2026 edition' found that the tax gap, which measures the difference between the amount of tax expected to be paid and what was actually collected, stood at an estimated 6.4%, up from 5.3% for 2023-24.

HMRC collected £865.2 billion over the 2024 to 2025 tax year, representing 93.6 per cent of all tax due, but non-compliance by small businesses alone constituted 62% of the gap. This was primarily due to unpaid Corporation Tax, as the tax gap rose to 18.1%.

HMRC noted that the tax gap for Corporation Tax had been broadly stable until COVID. In 2019-2020, it rose to 15.6%, but this was partly due to improvements in data collection.

Summary of figures

• The tax gap for VAT was 6.6% in 2024-2025.
• The tax gap for Income Tax, National Insurance contributions and Capital Gains Tax stood at 4% in 2024-2025, well below the 5.3% in 2013-2014.
• The tax gap for excise duty reduced was 5.5% in 2024-2025.
• The largest components of the tax gap by tax type in 2024-2025 are for Corporation Tax, Income Tax, National Insurance Contributions and Capital Gains Tax.
• The tax gap from individuals was the lowest proportion of the tax gap at 4% in 2024-2025.

Failure to take reasonable care, error and evasion are among the main behavioural reasons for the overall tax gap. Tax evasion accounted for 12% of last year’s tax gap, HMRC said.

To see the full details of HMRC's report, go here https://www.gov.uk/government/statistics/measuring-tax-gaps

If you need help with your tax calculations and returns, please contact us. We'd be happy to help.
 
A response to Land Remediation Relief consultation 
The government has published a response to its consultation 'Land Remediation Relief' (LRR). The review sought to understand whether the Corporation Tax relief continues to incentivise the redevelopment of brownfield land and whether reforms are needed to ensure it remains effective, accessible and aligned with modern remediation practices.

LRR is a Corporation Tax relief designed to support the regeneration of contaminated or long-derelict land and reduce pressure to develop greenfield sites. The relief allows companies to claim an additional 50% for qualifying revenue expenditure and 150% for qualifying capital expenditure.

It has two components: contaminated land and derelict land.

Contaminated land relief gives relief for expenditure on preventing, minimising or remedying harm caused by contamination. Derelict land relief is for land that cannot be made productive without removing buildings or structures, provided it has been continuously derelict since 1 April 1998.

The consultation respondents said that LRR rarely drives site selection; commercial factors such as planning risk, build costs and market conditions determine whether a site is taken forward. LRR is seldom considered at the outset because qualifying costs cannot be reliably estimated until intrusive investigations begin. 

Many respondents said the scope of qualifying expenditure is too narrow. Activities such as certain demolition works, mineshaft grouting, gas-holder remediation and some invasive species removal fall outside the regime, despite being essential to making land developable. 

SMEs reported significant administrative challenges as remediation costs are often embedded within wider contractor pricing, making it difficult to identify qualifying expenditure. There were also inconsistent interpretations of the rules and a lack of clear HMRC guidance.

Interestingly, the payable tax credit had a limited influence on a project. Many businesses preferred to carry losses forward for relief at higher tax rates. Views on grants were mixed. Grants can materially affect viability but are discretionary and slow to secure. LRR is rules-based and predictable, but its benefit is delayed and often modest.

The government has concluded that LRR is not meeting its intended objective of materially incentivising brownfield development.

While LRR remains valuable for some marginal or highly contaminated sites, the government sees a compelling case for reform rather than abolition.

Further details will be published in due course.
 
More consultations hint at what's to come
The government has published a raft of consultations on tax and business policies. It is worth being aware of these, as they are a good indicator of future policy direction likely to impact small businesses.

It is worth noting that your responses to a subject of interest will not be wasted. Most consultations get surprisingly few responses, and those are generally dominated by interest groups and industry-related organisations. One consultation on Welsh tax proposals got only four responses.

Call for evidence on PAYE Settlement Agreements (PSAs)
HMRC have launched a call for evidence on how 'PAYE Settlement Agreements (PSAs)' operate in practice, to improve clarity, consistency and administrative efficiency. PSAs allow employers to settle the Income Tax and Class 1B National Insurance Contributions (NICs) due on certain benefits and expenses on behalf of employees, instead of reporting them through payroll or on a P11D.

The government is seeking detailed feedback on how employers decide what to include in a PSA, how the rules are interpreted, and whether the current framework remains fit for purpose. 

The call for evidence focuses on the practical operation of PSAs rather than the underlying tax rules for benefits and expenses. HMRC want to understand:

• How organisations determine whether an item is minor, irregular or impracticable to report through standard PAYE routes.
• How PSAs interact with other reporting mechanisms, including payrolling benefits and P11D reporting.
• How employers apply the existing rules in real-world scenarios and where uncertainty or inconsistency arises. 

The government emphasises that PSAs are intended for items where it is genuinely difficult to identify the precise value attributable to each employee, such as catering at large staff events where individual consumption cannot be measured.

HMRC want to know how PSAs are managed, including time and resources, how employers handle calculations, including gross-up methodologies and allocation across tax bands. 

The call for evidence also explores whether PSA rules affect employers differently depending on size, sector or workforce structure. HMRC are particularly interested in whether SMEs face disproportionate administrative burdens.

The consultation closes on 15 September 2026. Responses can be made by email or by post. 

The full consultation document can be found at https://www.gov.uk/government/calls-for-evidence/paye-settlement-agreements-call-for-evidence/paye-settlement-agreements-psas

Mandatory Direct Debit proposed for VAT and PAYE payments
The government is consulting on proposals that will require most VAT-registered businesses and employers to pay VAT and PAYE liabilities by Direct Debit. The aim is to reduce late payment and simplify the payment process.

HMRC's analysis suggests that late payment is often linked to missed deadlines or to payments being allocated incorrectly, rather than to an inability or unwillingness to pay. Views are sought on why businesses that could use Direct Debit choose to pay by other electronic methods, the impact of requiring payment by Direct Debit and the exceptions or alternative arrangements that may be needed.

Currently, PAYE legislation only requires employers with at least 250 employees to pay via a range of electronic means, including Direct Debit.

Any changes would include updated sanctions for non-compliance and the consultation seeks views on these issues.
The consultation closes on 16 August 2026 and can be found at https://www.gov.uk/government/consultations/requiring-paymentof-vat-and-paye-return-liabilitiesbydirect-debit

 If you have queries or face problems with these tax reporting requirements, please contact us. We are here to help.
 
Funding and support for biotech start-ups
The Biotechnology and Biological Sciences Research Council (BBSRC) and the Science and Technology Facilities Council (STFC) DeepTech Catalyst Bio programme is open for applications. It supports early-stage biotechnology businesses in developing products and accessing markets.

Successful applicants receive:

• £50,000 in research and development (R&D) funding.
• A £10,000 innovation voucher for R&D activity.
• Technical, commercial, business and intellectual property support.
• Access to investors, customers and sector networks.
• Use of UK Research and Innovation (UKRI) campuses.

Applications will be taken from businesses that are UK-registered and less than five years old, are majority-owned by founders and employees and have previously received support from BBSRC, UKRI, Innovate UK, or a UKRI-supported accelerator.

The product or service must be based on bioscience innovation within BBSRC’s remit, be beyond the concept stage and address a clear market opportunity.

Eligible technologies must be biological in nature, interact with biological systems, or address a biological challenge. Applications focused solely on medical or clinical devices, therapeutics or diagnostics are not eligible.

Businesses interested in applying can find out more at https://iuk-business-connect.org.uk/opportunities/deeptech-catalyst-bio-2026/
The deadline for expressions of interest is 11:59 pm on 16 August 2026. 
 
New investment for former coalfield areas
It has been confirmed that former coalfield areas in England, Scotland and Wales will get a share of £13.5 million to construct new industrial developments for businesses. 

The money from the Government’s Growth Mission Fund will pay for half of the construction costs of new industrial developments that will house Small and Medium-sized Enterprises. The Coalfields Regeneration Trust - a charity dedicated to creating jobs and injecting growth into coalfield areas - will fund the other half.

The funding will support entrepreneurs in those areas who want to start their own business or business owners who want to expand their company in their home town. Subject to approval of the final business cases, the six areas set to receive funding are:

• Cowdenbeath (Perth Road): 51,000 square feet of light industrial units will be built along with a substation and 87 car parking spaces. 103 jobs will be created on site, with hundreds more supported.
• St Helens (Robins Lane, Sutton Fold): 32,000 square feet of light industrial units will be built alongside 54 car parking spaces. 64 jobs will be created on-site.
• Thoresby (Thoresby Vale Colliery): A 22,500 square foot industrial development is proposed once the site is purchased – expected later this summer.
• Ashington (Ashwood Business Park): A 49,500 square foot industrial development is proposed once the site is purchased. The sale is expected to be completed later this summer.
• Resolven (Vale of Neath Business Park): A 30,000 square foot industrial development is proposed once the site is purchased and planning permission secured.
• Seven Sisters (Nant y Cafn Business Park): A 45,000 square foot industrial development is proposed once the site is purchased and planning permission secured.

Once complete, sites will be self-sustaining, with rent revenue reinvested into the local communities.