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. 

26th June 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 now to be phased in
The announcement of mandatory payrolling for Benefits In Kind was originally expected to start in April 2027, but following industry pressure, it will now be introduced in two phases. 

Phase 1 will continue to be rolled out from 6 April 2027, with Phase 2 starting a year later on 6 April 2028. The move to mandatory payrolling will replace the current P11D process for most benefits and move it to real-time processing through a company’s payroll system.

Employers providing employee benefits must provide taxable values through payroll in real-time and apply Income Tax and Class 1A NICs through payroll rather than submitting yearly P11D forms.

Phase 1 of mandatory payrolling from April 2027 will include: company cars, car fuel, vans, van fuel and employer-provided medical benefits. 

Phase 2 from April 2028 will include most other Benefits In Kind except beneficial loans and living accommodation. These will continue to be voluntary.

Further guidance is expected by July 2026. 

If you need any help with the mandatory payrolling changes, please give us a call. We would be happy to help you.
 
Watch out, watch out, HMRC’s about
“Owners of dodgy shops that are evading tax: we are coming for you,” said Dan Tomlinson, Exchequer Secretary to the Treasury, as he announced that HMRC will make 30,000 high-street ‘interventions’ in the coming year as part of an initiative to tackle tax fraud and illegal activity.

Effectively, it is an aggressive campaign against vape shops, barbers, sweet shops and convenience stores from being used as fronts for criminal activity.

“Too many high streets have been blighted by illegal activity that harms local communities and undercuts honest businesses, and we’re determined to fix this. This is a sustained, nationwide effort, and HMRC and its partners will use every power available to dismantle these criminal networks,” added Mr. Tomlinson.

The new 350-strong team of criminal investigators to tackle evasion by small businesses, announced during the Autumn Budget 2025, has now been recruited.

To illustrate the work this team is carrying out, unannounced visits were made to six souvenir shops in central London last week involving representatives from HMRC, Home Office Immigration Enforcement, Westminster Council Trading Standards and the Metropolitan Police.

As a result, HMRC will continue tax compliance enquiries, the Home Office made three arrests for immigration-related offences and Trading Standards seized goods worth £5,433.

Businesses and activities that are being targeted include:

• Cash-intensive businesses that may be associated with illegal activity.
• Businesses engaged in money laundering and in breach of National Minimum Wage rules.
• Businesses selling illicit goods such as vapes and tobacco.
• Rogue directors who repeatedly shut businesses and reopen elsewhere (phenoxism).
• Providers and users of electronic tools that manipulate sales records to launder money or suppress sales at the till.

HSE plans guidance for robotics in the workplace
The Health and Safety Executive (HSE) and the Regulatory Innovation Office (RIO) have begun work on the safe and responsible adoption of robotics in the workplace.

Announced at London Tech Week, the project has been co-designed with industry to clarify regulatory requirements and support businesses in increasing the use of robotics.

HSE will work with Automate UK and the Manufacturing Technology Centre (MTC) on guidance on how collaborative robots (cobots) can safely work alongside humans.

The first stage, launching this summer, will deliver regulatory clarity for cobots. It will give industry confidence in how they can ensure robots can work safely alongside humans.

Andrew Curran CBE, Director of Science and Chief Scientific Adviser at the HSE, said, “We understand that despite there being no barrier to adoption in health and safety law, there is a fear of non-compliance, which is limiting adoption. Therefore, we are committed to working with the Regulatory Innovation Office and industry partners to deliver the first joint HSE and industry guidance on the use of cobots to address this barrier and improve business confidence.”
 
High energy bills force a quarter of UK manufacturers abroad
One in four of Britain’s manufacturers has moved production abroad or is seriously considering it, according to research by Make UK, formerly the Engineering Employers' Federation.

The manufacturers’ lobby group said high energy costs have prompted this shift in production, with UK kilowatt-hour charges nearly double those in comparable industrialised countries.  

The survey also found that one in ten companies were outsourcing more production, especially to Southeast Asia, and a further 16% were considering it.

Make UK estimates the average British manufacturer pays around 27p per kilowatt-hour for electricity. It was around 16p for other developed nations, while in the United States, it was as low as 6p.

“A year ago, the big trend was onshoring and bringing back supply chains to the UK. Now companies can’t use UK suppliers because they’re too expensive, so they’re going overseas. We are seeing quite a flight from UK manufacturing because we’re uncompetitive,” said Stephen Phipson, chief executive of Make UK.

He pointed out that on top of the high kilowatt-hour charge, manufacturers also had to pay other levies, the most expensive of which was the climate charge, making them even less competitive than foreign rivals.

The government has introduced the British Industry Supercharger policy, allowing about 450 energy-intensive businesses relief from four of those levies and the British Industrial Competitiveness Scheme (BICS) that will provide relief to a further 10,000 companies on three of the levies, but not until 2027.

Make UK wants BICS to be introduced immediately and to all manufacturers.
 
Only 20% of small businesses use AI regularly
A new report has revealed that only one in five small businesses use Artificial Intelligence on a regularly. Of those that did, they were dominated by telecom and technology companies.

Based on a survey of 1,320 ‘micro’ and small businesses, the ‘UK SME Digital and AI Adoption: The state of play in 2026’ report found that only six per cent have embedded AI into their daily work.

The report was compiled by Enterprise Nation’s Tech Hub in partnership with Google, Sage, Dell Technologies and Square.

How the technology was viewed varied across geographic areas and the size of the company. It also offered contradictory data.

Although only 21% of those surveyed used AI regularly, 57% described themselves as highly or moderately digital.

In terms of sector, 74% of information and communication businesses used AI to some degree, while only four and one per cent, respectively, for the construction and agricultural sectors.

Of those firms that had adopted AI early, 65% said their use increased in the past year. The report concluded that early adopters were likely to pull ahead of competitors.

The report warned that the smallest businesses were at the greatest risk of being left behind, with only 34% of one-person businesses using AI at all. Sixty-eight per cent of companies with 50-249 employees, on the other hand, did use AI.

When asked about what held them back from adopting AI:

• 53% said cost.
• 46% cited lack of skills.
• 38% had concerns about privacy and data.
• 37% had a lack of time.

In geographic terms, 30% of London and 27% of Scotland’s Small to Medium-sized Enterprises (SMEs) used AI regularly, compared to only 10% in the North East of England and 6% in Northern Ireland.

Shockingly, the report found that 22% of SMEs in the North East were digitally excluded, with 22% of them mostly offline.

A PDF copy of the report can be found at https://a.storyblok.com/f/102007/x/ec83d6c6a3/digital-and-ai-adoption-among-uk-smes.pdf 

19th June 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

Companies House to bring in changes to accounts filing from April 2028
Companies House will introduce changes to accounts filing due to governmental reforms under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act 2023).

The changes will now come into effect from April 2028, rather than April 2027, to give companies more time to prepare.

The reforms include requiring small companies and micro entities to file profit and loss accounts with Companies House as other companies do. They will have the option to opt out of publishing this information on the public register.

As with Making Tax Digital, companies will be required to file annual accounts via commercial software.

The new rules will introduce additional limitations, including removing the option for companies to file abridged accounts and reducing the number of times a company can shorten its accounting reference period. There will also be a strengthened eligibility statement for all companies claiming an audit exemption and a requirement that the component parts of the accounts and reports be filed together.

Companies House will contact all companies via their registered email address to tell them about these changes and signpost available guidance.

Although transparency and data clarity were prime factors in the planned changes, allowing small companies and micro-entities to opt out of publishing their filed profit and loss accounts protects their privacy and mitigates commercial risks.

Software-only accounts filing
From April 2028, Companies House will require all UK-registered companies to file their accounts in Inline eXtensible Business Reporting Language (iXBRL) format by using commercial software. This applies to companies that file their own accounts and those using third-party agents or accountants to file their annual accounts. Web and paper-based filing systems will be closed for account filings.

The full details of changes will be confirmed in due course but are likely to increase the operating costs of small businesses.

To select a software provider, Companies House recommends using the interactive list of software providers on GOV.UK. 

https://www.gov.uk/software-company-accounts

AI chatbot for government queries
The government has made a new Artificial Intelligence (AI) tool available on the GOV.UK app called GOV.UK Chat. It draws on official government guidance, including tax, to answer questions. 

According to the government press release, GOV.UK Chat is an Artificial Intelligence (AI) chatbot designed for people to ask questions in plain language and receive instant, clear and 'reliable' answers drawn from official government information. The aim is to reduce demand for helpline services and speed up searches for information on the GOV.UK website.

Users of the AI chatbot will be able to get answers on a range of subjects, including tax. It is important to note GOV.UK Chat has limitations. While it uses HMRC guidance on the GOV.UK website to source answers to tax questions, it does not source information from HMRC's manuals.

This makes it unlikely to be useful beyond answering basic tax questions.

Businesses should also be aware that GOV.UK Chat is only available on the GOV.UK app. This means any use by your staff that is related to your business will likely be on their personal devices using personal logins, which could raise privacy and data security concerns.

Additionally, as with any AI tool, the answers given may not be accurate or complete and 'hallucinations' can cause AI tools to present incorrect responses as fact.
  
Snapshot of entry-level hiring in the UK
LinkedIn and the AI & the Future of Work Unit are partnering to investigate the structural forces shaping labour market outcomes. The initial brief provides a snapshot of hiring data for entry-level and more senior positions in the UK.

There is increasing concern that opportunities for those entering the workforce are narrowing. Since entry-level hiring shapes the long-run composition of the workforce, it will affect the supply of skilled workers for years to come.

Some of the early conclusions may come as a surprise. Entry-level hiring is falling in step with the broader market. Averaged across industries, the entry-level trajectory closely mirrors all senior roles.

Since the post-pandemic hiring surge, the UK’s hiring rate has turned negative. As of April 2026, it sits at minus 14% year-over-year, with every tracked industry in decline. However, not all entry-level roles are declining. Of the 38 UK entry-level occupations above LinkedIn’s minimum hiring threshold in April 2026, 30 are declining with only eight growing. 

The analysis found that information-processing roles are weakening while relational roles are growing. The disconnect is not about whether candidates are skilled, but about whether they are skilled in the ways employers currently demand.

The steepest declines are concentrated in information-processing and professional roles:

• Software Engineer (–27%).
• Graphic Designer (–28%).
• Accountant (–29%).
• Product Manager (–24%).
• Data Analyst (–15%).
• Legal Assistant (–14%).
• Data Engineer (–11%).

The strongest growth is in sales and customer-facing roles: Retail Assistant (+25%), Sales Development Representative (+17%) and Business Development Representative (+16%).

The full report can be found at: https://www.gov.uk/government/publications/entry-level-hiring-in-the-uk-a-snapshot/a-snapshot-of-entry-level-hiring-in-the-uk
 
Solving fundamental challenges in your business
Most business owners will face a moment when something in the business feels persistently, stubbornly wrong. Perhaps sales are stalling, staff keep leaving or cash always seems tight.

These could be described as fundamental challenges. These challenges generally don’t go away on their own and can erode the business if not addressed. How, then, can a fundamental challenge in your business be solved? Let us take you through a method that we have found to be effective.

Step 1 - Identify the real problem
Since you want to avoid treating a symptom rather than the cause, it is worth spending time working out what the real problem is. For example, high staff turnover might seem like a case of not being able to recruit the right people, but the root cause might be unclear role expectations or a poor working environment.

Ask 'why' repeatedly until you get to the root of the problem. A useful way to approach this is to write down the problem in one clear sentence, then challenge each assumption in that sentence.

Step 2 - Define what the problem means to the business
Once you have identified the root problem, the next step is to work out how it's affecting the business. For instance, you could consider:

• What results are you not getting in the business because of this problem? For example, if sales performance is inconsistent and targets are being missed, this is stalling the growth of your business.
• What is the financial effect of not dealing with the problem? That could include the difference to your bottom line and whether some of the business’s borrowing is unnecessary or the cost of lost opportunities.
• How is the problem distracting the business from its long-term objectives? Perhaps there is no time to do meaningful strategic work because too much time is lost on firefighting.

This step helps you to quantify the effect the problem is having on your business. Sometimes it can reveal that a problem has less of an effect than you thought. It may be more productive to put effort in elsewhere. On the other hand, once you are clear how much a problem is holding your business back, you gain the motivation to sort it out.

This step also provides you with clarity. A vague problem stays unsolved, whereas when a problem and its impact are clearly defined, it can be tackled more easily.

Step 3 - Identify the system needed to solve the problem
Most fundamental business problems exist because a reliable system is absent. So, give some thought to what type of system, if introduced, would make it difficult for the problem to continue happening. For example:

• A people system involving set hiring criteria, an induction process and regular appraisals of staff turnover.
• A sales system with pipeline management, scripts or set processes and accountability for inconsistent revenue.
• A financial system including cash flow forecasting, debtor management and payment terms for cash flow problems.

Step 4 - Design the system
Having identified what type of system can help, the final step is to design that system so that it works for you.
You will need to decide who will design the system and what the main steps might be. What forms and documents will be needed to operate the system? Will any employee training be needed to get the system up and running effectively?
Conclusion

Fundamental challenges rarely solve themselves. If they are approached methodically, you can find the solution and help your business to continue growing.

If you would like a structured way to work through this process, we have put together a Fundamental Challenges Worksheet that guides you step-by-step, from pinpointing the real problem to mapping out the system that will solve it. To request your free copy, simply get in touch, and we will send it straight to you.
 
Delayed payments and rising costs see Britain’s builders tottering on collapse
A new report has concluded that late payments and rising costs are crippling Britain’s construction sector. Firms already in or at risk of financial distress make up more than eight in ten companies.

The report, Fixing the Foundations, was based on a survey of senior financial managers of property and building companies in the UK, and it found worrying trends.

• 93% report late payments from clients, contractors or supply chain partners, running an average of 53 days overdue.
• One in five (20%) firms now finance their own projects while they wait to be paid.
• 18% say late payments represent one of the single biggest threats to their business.

Rising costs are also a significant problem hitting profit margins. Inflation factors such as COVID, higher employment costs, the Russian invasion of Ukraine, the Middle East conflict and unpredictable US tariffs have not only increased costs but also delayed projects.

For contracts that were signed before climbing inflation, one in five companies have seen seriously reduced profitability and a further 18% say some have been delayed to the point of no longer being profitable at all.  

Another serious concern included supply chains, according to the report’s publisher, Menzies. 18% were not confident that their business could survive a single insolvency or change in the supply chain.

If you would like help with cash flow analysis and prompt payments, just let us know. We can look at your numbers together and ensure you are prepared.
 
New concierge service and visa scheme unveiled for UK’s fastest-growing firms
London Technology Week saw the government make a series of announcements aimed at supporting Britain’s high-growth business sectors.

The Chancellor, Rachel Reeves, announced two new schemes, including visa fee reimbursement for scale-ups in digital and tech, life sciences and clean energy and allowing the Office of Investment to offer fast-track referral for a UK Expansion Worker sponsor licence.

Both measures are intended to help high-potential international businesses set up in the UK more quickly and help UK firms attract exceptional skills, boosting competitiveness.

The measures come hand-in-hand with the Department for Business and Trade announcing a bespoke concierge service for Britain’s fastest-growing companies. Details of the new concierge service remain vague but entail offering support services that will be ‘joined up’.

The government is now looking for a private sector partner to run a pilot to strengthen the UK’s scale-up pipeline.

Targeting ‘the most promising scale-ups’, its official role will be tiered support to unlock deals, unblock delays and create jobs, growth and opportunity for businesses across the UK. It will be supported by the Global Talent Taskforce.

A year ago, the government invested £54 million in the launch of its Global Talent Taskforce, set up to attract ‘world-class’ researchers and their teams to the UK by covering relocation and research costs over five years.

Whether the challenge is regulation, access to finance, procurement, another barrier to growth or access to global talent, the new service’s role will be to ensure government acts quickly and decisively.
 
Small businesses get helping hand with strengthened debt advice
A new £4 million funding boost has been given to business debt advice services to help small businesses and the self-employed. The funding will go towards expanding access to expert support to help them get back on track, giving a leg up to an additional 16,000 businesses over the next three years.

This is building on the existing Business Debtline service run by the Money and Pensions Service.

The new funding will support the government’s Plan for Small Business that helps small businesses access the tools and support they need. This modernisation fund will allow them to spend more time helping their clients, particularly in complex cases that may need additional support.