25th September 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

Big changes to the Apprenticeship Levy
The Apprenticeship Levy has undergone its biggest overhaul since its introduction, with major changes taking effect from 1 August 2026. For Small to Medium-sized Enterprises (SMEs), the most significant development is the expansion of what levy funds can be used for under the new Growth and Skills Levy. This expansion comes alongside tighter funding rules, making planning more important than ever.

The two headline changes are the removal of the government top-up and that levy-paying employers can now use their funds for a broader range of approved training, not just traditional apprenticeships.

Alongside full apprenticeships, the Growth and Skills Levy can now support foundation apprenticeships and approved apprenticeship units. This gives businesses greater flexibility to address specific skills gaps, upskill employees more quickly and access shorter, targeted training programmes without committing staff to a full apprenticeship.

Funding changes
The funding changes also create new financial pressures. From 1 August 2026, the government has removed the 10% top-up that was previously added to levy funds entering employers' apprenticeship service accounts.

Businesses will see less funding available.

There is also a reduction in the expiry period for new levy funds. Previously, employers had 24 months to spend funds before they expired. Any levy funds entering accounts from 1 August 2026 must now be used within 12 months. Funds already in accounts before that date continue to benefit from the old 24-month rule.

For businesses, this means unused funds are far more likely to be lost if training plans are delayed, pushing employers to regularly review their balances and plan training around the funding available.

Changes have also been made to co-investment arrangements when levy-paying employers exhaust their available funds.
For apprentices aged 16 to 24, eligible training costs are fully funded by government once levy funds are depleted. For apprentices aged 25 and over, employers must contribute 25% of the training cost, with government funding the remaining 75%, up to the relevant funding band limit.

This represents a higher contribution requirement than many employers were previously accustomed to and could increase training costs for businesses with older apprentices.

The levy itself remains unchanged. Employers with annual pay bills exceeding £3 million must pay 0.5% of their payroll costs, less a £15,000 annual allowance. The levy is collected through PAYE and applies to private, public and voluntary sector organisations. Connected companies and charities must consider their combined pay bill when determining liability.

In England, levy-paying employers access funds through an apprenticeship service account. The amount available is based on the levy paid and the proportion of employees who live in England. These funds can be used to pay for approved training and assessment costs, subject to funding band limits.

Non-levy paying businesses
For SMEs that do not pay the levy, government support remains. From August 2026, non-levy employers receive 100% funding for apprentices aged 16 to 24, up to the funding band maximum. For apprentices aged 25 or over, employers contribute just 5%, with the government paying the remaining 95%.

Eligible non-levy employers may also qualify for a hiring incentive of up to £2,000 when recruiting a new apprentice aged 16 to 24 from October 2026.

Levy funds can pay for approved training, assessment, off-the-job learning, certain qualifications and English and maths provision linked to apprenticeship programmes. They cannot be used for wages, recruitment costs, travel expenses, general business overheads or equipment required for normal job duties. Any training costs above the funding band maximum must be paid directly by the employer.

Another opportunity for SMEs is the levy transfer. Larger levy-paying employers can transfer up to 50% of their previous year's levy funds to other organisations, including smaller businesses within supply chains or local communities. This can provide valuable access to funded training where SMEs might otherwise face costs.
 
Chancellor promises to cut red tape and boost growth
The Chancellor, John Healey, has given a number of speeches explaining how he intends to boost growth, reduce red tape and maintain fiscal responsibility.

Speaking at the Manufacturing Technology Centre in Coventry, the Chancellor promised changes to the judicial review process for Nationally Significant Infrastructure Projects, arguing that the current system of continued delays added unreasonable costs and destroyed growth.

“I will take an axe to the thicket of consultation, litigation and administration that has a stranglehold too often on private investment,” he said.

The government pointed to the delays in Sizewell C and that while the East West Rail project began in 2019, it hasn’t gone any further.

Most absurd of all was that despite 99% of respondents to a Call for Evidence supporting microchipping cats in the same way as dogs in 2019, it took nearly five years due to further consultations and addressing minority objections.

He criticised excessive risk aversion and said it stifled business. He also set a goal to double the number of UK unicorn companies, those valued at over £1 billion. 

The key measures he announced to prevent delays from holding back growth and investment include:

• Parliament will be able to designate and approve the country’s most important infrastructure projects, giving them significantly enhanced protection from legal challenge. This expands plans first proposed for critical energy infrastructure  
• The government also plans to introduce a fixed Challenge Window, which will ensure points of legal challenge are identified and addressed earlier, helping prevent delays after consent has already been granted.
• Departments will be expected to reduce unnecessary consultations. Ministers should focus on project delivery, using consultations only when there is a clear reason to do so.  
• The Attorney General will also publish updated guidance making clear that legal risk should inform ministers’ decisions, not dictate them.  

Government promises growth for space industry
The troubled Shetland SaxaVord Spaceport project has been saved. The £30 million rescue package for the ex-RAF station in Unst was announced the day after a rapidly rolled-out new UK space strategy was presented by the government.

SaxaVord, the UK's first fully-licensed spaceport, has regulatory approval for up to 30 rocket launches a year, with two German companies already signed up.

Scottish Secretary Douglas Alexander said, ”Scotland already builds more satellites than anywhere else in Europe, and with a £30m UK government investment boost, SaxaVord is now poised to deliver up to three-quarters of the continent's orbital launch slots.”
But SaxaVord exemplifies the problems facing the UK’s space industry.

Accounts showed a technical default on a £10 million loan last year, highlighting the financial and practical difficulties faced by the sector. Unst has limited five-week ‘launch windows’ reduced by bad weather.

Regulatory limitations have also held back the industry. Following the failure of the UK’s first commercial space launch from Cornwall in January, the Parliamentary Science and Technology Committee heard that it cost one satellite company more money to get a launch licence than to physically put the satellite into space.

The importance of the space and related sectors ought not be underestimated. Government figures show the space industry generated £18.5 billion for the UK and employed over 55,000 people.

Landmark missions benefit from UK know-how, such as the UK-built Rosalind Franklin Mars Rover. 

UK Space Strategy
The new UK Space Strategy policy is backed by £7.8 billion of investment until 2030. Its mission is to safeguard the UK’s national security and defence capabilities, while exploiting technology opportunities. It brings the government’s space investment and activity under one plan.

Ministers said they wanted to create jobs and help Britain and its partners launch satellites without relying on countries ‘further afield’. The new policy formally replaces the previous National Space Strategy, published in 2021. 

The new UK Space Strategy expropriates existing policies and financing, including some that up until now were not regarded as being space-related.

Space Domain Awareness, the study and monitoring of objects like satellites, rockets and debris orbiting our planet, is being backed by projects including £149 million for the European Space Agency’s (ESA) Vigil mission and £85 million for the National Space Operations Centre.

UK funding will see British tech offer earlier warnings of potential satellite collisions, hostile activity and solar storms, helping protect the power, communications and navigation services people rely on every day. 

Another £880 million will help beef up the UK’s space control and intelligence, surveillance, and reconnaissance capabilities, funding technologies that can track military activity on the ground and potential attacks on satellites. This should improve responsiveness and decision-making in protecting the country and its space assets. 

A further £2.8 billion will strengthen connectivity, including the Connectivity in Low Earth Orbit and SKYNET defence communications programmes. This plays a pivotal role in keeping the UK’s Armed Forces connected globally.

The new joined-up thinking is ambitious on announcements but less so on funding. The £7.8 billion has been pulled together from existing funding projects and brought under one umbrella.

Initiatives include £57 million already allocated by the Department for Transport to improve rail connectivity, £190 million from UK Research and Innovation (UKRI) for astronomy and space science research and £9 million from the Met Office which is funding that was already announced.
 
SMEs warned on all internet-exposed systems
Disruptive cyber attacks are going beyond computers and into manufacturing and processing systems, Small to Medium-Sized Enterprises (SMEs) have been warned.

The National Cyber Security Centre (NCSC) has seen a concerted and increased number of attacks on what’s known as Operational Technology (OT) in numerous sectors both globally and domestically. These attacks have had real-world effects.

Hackers cut off a small gas-fired 'peaker' power station earlier this year. These UK plants have small local capacities, are remote with no employees and use OT to balance local baseload and feed into the national grid.

OT is both the hardware and software systems that monitor, control and automate infrastructure and processes across a variety of sectors.  

The NCSC is warning that organisations should not assume their equipment is not internet-exposed. It said, “Against the backdrop of technology-enabled uplifts in cyber capability and increased geopolitical instability, the NCSC assesses that the threat from state use of offensive cyber, including outside of conflict, has almost certainly increased.”

Without organisations testing legacy structures, older equipment or misconfiguration, systems can be easy to exploit for state and non-state actors.

Companies should examine all their Programmable Logic Controllers (PLCs), Industrial Control Systems (ICS) and Supervisory Control and Data Acquisition (SCADA) systems to ensure their security.

The NCSC has outlined a series of steps that should be taken.

• Build a definitive view of your OT architecture, including all assets, communications pathways and external connections. This will help identify internet-exposed systems, unmanaged assets and legacy connectivity that may introduce risk.
• Ensure OT devices are not directly exposed to the public internet.
• Change any default credentials and prevent the use of shared passwords on web interfaces, management interfaces, and management protocols.
• Use unique accounts for administrators and enable multi-factor authentication (MFA) wherever supported. Any stronger authentication mechanisms, such as public/private key authentication, are recommended.
• This includes the control of access to OT networks. The NCSC recommends updating systems efficiently. This also includes ensuring that the management of these devices is only possible from a segregated management network that is not connected to the internet.

The NCSC proposes updating certain industrial protocols and security applications, which it lists on its website, including procedures.
If it wasn’t important before, IT departments should ensure they log and monitor all connectivity to and within OT networks. As OT environments are typically static and predictable, baseline monitoring can be highly effective at identifying unauthorised activity, misconfigurations, or potential cyber compromise.

Monitoring is also important during normal operations. PLCs, in particular, should not be left in programming or maintenance modes and should be in write-protected mode where possible.

The NCSC also recommends the separation of networks; for example, the business and management system should be separated from OT and, come to that, security systems.

Don’t just keep backups; it is important to test the backups and your recovery procedures. Many organisations, including those regarded as ‘tech-savvy’, have been diligent in backup procedures but then hit problems when it came to restoring their data.

18th September 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

Bank of England holds interest rates at 3.75%
A split decision by the Bank of England's nine-member Monetary Policy Committee has held interest rates at 3.75%. The 6-3 decision came in spite of the Office for National Statistics reporting UK inflation accelerating to 3.1% the day before. July's inflation rate was 2.9%.

Rising fuel prices due to war in the Straits of Hormuz, along with US tariffs, have seen global pressures on prices, with the UK's position exacerbated by poor domestic growth.

Businesses and homes have been put on notice by the Bank's governor, Andrew Bailey. He warned that should inflation move towards 4%, the Bank was likely to change its position.

In a surprise move, the Bank also announced that it was suspending an expected sale of £488 billion of government debt. £120 billion would be held to back the Bank’s issuance of banknotes. Other gilts would be sold to the market at a slower rate.

The Bank of England's decision came after the US Federal Reserve lifted borrowing costs for the first time since 2023.
 
Changes to Self Assessment reporting for directors
HMRC have clarified the position on Self Assessment tax return reporting requirements for directors of close companies and updated their guidance for directors of charities.

A close company is a company that is owned or controlled by a small number of people, usually five or fewer shareholders.

New requirements
Additional reporting requirements for directors of close companies came into force for Self Assessment returns from 2025-26 onwards. Those who are affected now need to report the following on their tax return:

• The name of the close company.
• The registered number of the close company.
• The amount of income they receive from dividends from that company in that tax year.
• The percentage of their shareholding.

Only close company directors who are currently required to complete a Self Assessment return need to report this information. However, the information must be provided even if the company is only a close company for part of the tax year.

Up until now it has been unclear whether directors who are unpaid or who are not shareholders of the company need to provide this information, and HMRC have now addressed this.

What have HMRC said?
HMRC have confirmed that when directors are unpaid and/or have zero shareholdings in the close company, they must still complete the new boxes on the tax return. Directors of dormant close companies must also complete the new boxes.

Where no dividend income has been received, or there is no shareholding, '0' will need to be entered in the appropriate boxes.

However, directors of registered charities or Community Interest Companies do not need to complete the new boxes if they have not received, nor become entitled to receive, any employment income or dividend income. This includes any other type of distribution from that company or any connected company. 

HMRC have highlighted that a £60 penalty may apply if the boxes on the tax return that are related to close companies are completed incorrectly.

If you need any help with completing your tax return, or are unsure whether these requirements apply to you, please get in touch. We’d be happy to help you.
 
Update on UK VAT refunds for non-UK businesses
HMRC have updated guidance on UK VAT refunds for non-UK businesses in a VAT group. Revenue & Customs Brief 10 (2026) explains changes to how non-UK businesses in a VAT group should make future UK VAT refund claims and the transitional arrangements. It also explains how to ask HMRC to reconsider claims made since 1 January 2021 that have been refused.

The issue
Non-UK businesses can use the overseas VAT refund scheme to claim back UK VAT if they meet the scheme conditions. Before Brexit, businesses established outside the EU had to submit claims through the VAT group’s representative member, even if that representative member had not incurred the UK VAT.

In some circumstances, businesses established in the EU could submit claims in their own name.

Since 1 January 2021, all non-UK businesses that were members of a VAT group have had to submit claims through the group representative member.

As a result, some EU VAT group members were no longer able to submit claims in their own name. This meant that in some cases, such as where the representative member was registered for VAT in the UK, the business that incurred the UK VAT was unable to claim a refund.

This was an unintended consequence of the UK’s exit from the EU.

The solution
The current changes will allow all eligible non-UK businesses to claim refunds of UK VAT in the same way, whether they are in the EU or elsewhere.

All non-UK businesses that are members of a VAT group can and must submit their own claim for any UK VAT they incur. HMRC will not accept claims from a representative member unless that representative member incurred the VAT.

As a transitional measure, HMRC will accept claims for VAT incurred between 1 July 2025 and 30 June 2026 (the 2025-26 prescribed year) from either:

• The individual VAT group member that incurred the VAT.
• Or the representative member of the VAT group.

The deadline for submitting claims for the 2025-26 prescribed year is 31 December 2026.

Reviewing rejected claims by HMRC
HMRC have said they will review claims for VAT incurred from 1 January 2021 that have previously been rejected because the representative member did not submit the claim, provided that the VAT was not included in a later claim.

If you have concerns over your VAT position or your tax position within a group, please get in contact. We are here to help you.
 
Shakeup in AIM rules needed for survival
The biggest overhaul of the AIM (Alternative Investment Market) in years has become effective, with the London Stock Exchange (LSE) introducing reforms designed to reduce regulatory burdens, support fundraising and make AIM a more attractive market for growing businesses.

The changes come as the stock market for small businesses and high-growth companies faces an existential risk. Tax changes, poor valuations, reduced risk appetite and greater competition for funding have reduced its attractiveness.

According to financial markets platform Dealogic, nearly 1,700 companies were listed on AIM in 2007. This fell to 605 this year, while the market valuations have fallen by over a third.

The AIM also faces competition from the newly launched Private Intermittent Securities and Capital Exchange System (Pisces), a secondary trading market for private company shares.

In an effort to make the AIM more attractive, the LSE announced new rules on 5 August 2026 that are intended to strike a balance between investor protection and the needs of ambitious growth companies. For businesses considering an AIM listing, acquisition strategy or future fundraising, the changes could have significant implications.

Working capital statement removed
One of the most significant reforms is the removal of the traditional working capital statement from AIM admission documents.

Previously, directors were required to confirm that a company had sufficient working capital for at least 12 months following admission. Under the new rules, this requirement is replaced with enhanced disclosures covering:

• Material capital resources.
• Financial obligations.
• Use of fundraising proceeds.
• Directors’ assessment of future funding requirements over the next 12 months.

The change should give investors a fuller picture of a company's financial position rather than relying on a single formal statement. Underlying financial due diligence remains essential, particularly for businesses that may need future fundraising to support growth.

New capital access window
AIM companies can now request a temporary suspension of trading while undertaking an equity fundraising.

The new voluntary ‘capital access window’ is designed to provide companies with greater control over fundraising negotiations and reduce market volatility during the process. This could prove particularly useful for smaller businesses seeking to raise capital without exposing sensitive discussions to immediate market reaction.

Reverse takeover rules relaxed
The definition of a reverse takeover has been significantly narrowed. Previously, shareholder approval was generally required when a transaction exceeded 100% under AIM's class tests. Under the revised rules, transactions will only be classified as reverse takeovers if they result in a fundamental change of the company's business, board or voting control.

As a result, some large acquisitions that would previously have required shareholder approval may now proceed more quickly, provided they do not fundamentally transform the company.

Higher threshold for substantial transactions
The threshold for a substantial transaction has increased from 10% to 25%. This aligns AIM more closely with the Main Market and will reduce the number of transactions that fall within the substantial transaction regime. For acquisitive businesses, this should lower compliance costs and simplify execution of smaller acquisitions and disposals.

Faster route to market
The former Designated Market Route has been replaced by a new Express Market Route. 

The revised framework widens eligibility to companies from more jurisdictions and shortens the required Schedule One announcement period to three business days. In addition, a new dual-admission route allows companies seeking simultaneous admission to both AIM and an approved overseas market to rely on their existing admission documentation, provided they raise at least £6 million.

Governance and founder-friendly reforms
Measures have been introduced to make AIM more attractive to founder-led businesses. Companies can now introduce special voting shares at admission, enabling founders to retain enhanced control after listing. Unlike some international markets, AIM has not imposed a mandatory sunset clause, leaving investors to assess the structure as part of their investment decision.

Another notable reform is the removal of the requirement for AIM companies to adopt a recognised corporate governance code on a ‘comply or explain’ basis. Instead, businesses must disclose information across five prescribed governance areas, allowing greater flexibility for companies at different stages of development.

Greater focus on investor responsibility
The revised rules introduce a prominent ‘buyer beware’ statement that must appear at the front of AIM admission documents.

This reinforces the principle that investors should undertake their own due diligence when evaluating AIM-listed companies. AIM companies are also now expressly permitted to respond to market rumours and third-party commentary when they believe information circulating in the market may be inaccurate or misleading.

If you are seeking new financing, considering listing on AIM or joining Pisces, please get in contact with us. We’re here to help.
 
And in other news ...
Talk to the government’s cyber security experts
The government’s cyber security officials are offering businesses the opportunity for direct contact with them through a webinar.

With the recent government shake-up, the UK’s cyber security experts have moved from the Department for Science, Innovation and Technology (DSIT) to the new Department for Digital, Culture, Media and Sport (DCMS).

The webinar is designed to give businesses the opportunity to hear from the cyber security team about how its work is developing, ongoing partnerships with other parts of government and how you can influence policy development.

It’s a 45-minute session, with opportunities for questions. If you’re interested in attending, respond to the online form.  
https://forms.cloud.microsoft/Pages/ResponsePage.aspx?id=BXCsy8EC60O0l-ZJLRst2IUDd28JRz1Ft7H72Z72iehUOUZQRzlRQVQ2WjJUQ1c0RElCQ1ZYVzVISy4u

Date: Thursday 24 September, Time: 3 pm to 3:45 pm 

FTSE bosses rake it in
New research shows that average payments to FTSE 100 chief executives were more than £5 million this year. Advisory firm WTW (formerly Willis Towers Watson) reported that the median total remuneration for the bosses was £5.1 million, up from £4.6 million in 2025.

The increases follow several years of more restrained pay levels for senior executives, with proponents arguing the higher remuneration packages were needed to compete with high levels of pay found in the USA, in particular. According to WTW, in the decade before 2020, pay averaged between £3 and £4 million.

Activist investors and shareholder advisers had been vociferous in opposing high pay rates, but the past few years had seen fewer objections and votes against large pay packets.

Trading in Jersey?
Trademarks registered in the UK will no longer cover the island of Jersey from August 1st. Should your business regard your trademark as important and you trade heavily with Jersey, now is the time to take action.

For a company’s trademark to apply, it must now be selected separately.

Do you know about the 159 service?
As online and telephone fraud rockets, employers and employees are being reminded of the 159 dedicated telephone number for helping people to safely contact their bank.

Launched in 2021, the service has received more than one million calls and provides a simple route for people receiving unexpected calls about financial matters to end the conversation and independently contact their bank. 

The warning comes as the latest UK Finance Annual Fraud Report reveals criminals stole £1.28 billion through payment fraud during 2025, up 4% year-on-year. Authorised Push Payment (APP) fraud alone accounted for £576.4 million in losses, including £75.6 million in business losses.
  
England’s new tourist tax
Mayors across England are to be given the power to charge a tourist tax on overnight stays which would apply to British and foreign visitors alike.

Rather than being a flat fee, it would be a percentage of the visitor’s total spend, with proponents saying the money raised could be ring-fenced for tourism-related spending. The rules published so far, however, will allow mayors and strategic authorities to decide how levy revenues are spent.

The government consulted on the introduction of an overnight visitor levy between November 2025 and February 2026 and has decided to implement its consultation outcome document.

It will bring a bill to Parliament ‘in due course’ to introduce the levy.

All mayoral and foundation strategic authorities in England will be able to introduce an overnight visitor levy, subject to consulting locally and giving businesses advance notice of its introduction and any changes.

It will apply to all short-term visitor accommodation although there can be local exemptions for charitable accommodation, campsites or shelters. To avoid confusion for visitors and businesses, exemptions for localities will not be allowed.

Accommodation providers will be liable for the levy that will be paid through a self-assessment process. It’s up to these providers to pass on the levy to their customers or not. Local authorities will oversee both tax collection and regulation.
 
Community groups invited to apply for £2.5m funding
Community organisations across England will be able to bid in the next wave of the Common Ground Award. The Common Ground Award 2026 - 2027 is a competitive grant fund providing capital investment to organisations in England.

The award provides up to £2.5 million for projects, groups and organisations to bring people together and transform their community. It was first launched last year and is now open to a second wave of applicants.

It backs groups that know their communities and are already helping people from different backgrounds meet, mix and build trust.
One example could be turning a tired community building into a more welcoming hub, buying equipment so more people can take part in local activities, or creating spaces where neighbours can meet, talk and bridge divides.

The next round will provide up to £2.5 million in funding, with individual applicants able to bid for between £20,000 and £50,000 to improve the facilities, spaces and equipment that help them continue delivering vital work in their communities.

Groups of organisations working together can also apply for grants of up to £250,000, helping them increase their impact.
Individual organisations can apply for £20,000 to £50,000. In exceptional cases, applications may be considered up to £100,000 where there is clear evidence of need and significant expected impact.

Consortium applications can apply for between £100,000 and £250,000.

The fund supports capital costs only, including the construction or renovation of facilities, spaces and equipment that enable organisations to bring people from different backgrounds together.

The prospectus for the 2026-27 fund can be found here:  https://www.gov.uk/government/publications/common-ground-award-2026-to-2027-prospectus

11th September 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

BENEFITS IN KIND: MANDATORY PAYROLLING FROM 6 APRIL 2027
Mandatory payrolling of benefits in kind (BiKs) will begin from 6 April 2027, with a phased introduction designed to give employers and payroll providers time to adapt.

Under the first phase, covering the 2027/28 tax year, mandatory payrolling will apply to:

• Company cars
• Company car fuel
• Vans
• Van fuel
• Private medical benefits

These benefits will need to be reported through payroll in real time rather than being reported after the end of the tax year on form P11D.

Mandatory payrolling will then be extended to most other benefits and expenses from April 2028. HMRC has confirmed that employers will be able to register voluntarily from November 2026 to payroll other benefits not included in the first phase, such as beneficial loans and living accommodation.

The change will affect employees as well as employers. Employees who currently pay tax on benefits through adjustments to their tax codes will instead pay the tax in real time through PAYE. Some employees may also be paying tax on BiKs from earlier years at the same time, which could create confusion about their take-home pay. HMRC is encouraging employers to communicate these changes well in advance.

WHAT SHOULD EMPLOYERS BE DOING NOW?
If you have employees in receipt of BiKs, we recommend that you:

1. Compile a complete list of all benefits currently reported on P11Ds.
2. If you carry out your own payroll reporting, review whether your payroll software can support real-time BiK reporting from April 2027.
3. Consider how you will deal with joiners, leavers and changes in benefit values during the year.
4. Establish procedures for managing underpayments and overpayments.
5. Develop an employee communication plan explaining how the changes will affect tax deductions and tax codes.

Although the first mandatory reporting deadline is still several months away, employers that start preparing now are likely to face a much smoother transition when the new regime takes effect in April 2027.

MAKING TAX DIGITAL FOR INCOME TAX: AN UPDATE
Making Tax Digital (MTD) for Income Tax became mandatory from 6 April 2026 for sole traders and landlords with combined gross income from self-employment and property exceeding £50,000, based on their 2024/25 tax return. Qualifying income is measured before expenses are deducted.

The scope of MTD will widen in future years:

• From April 2027, it will apply to those with qualifying income above £30,000.
• From April 2028, it will apply to those with qualifying income above £20,000.

Under MTD, affected taxpayers must keep digital records and submit quarterly updates to HMRC using compatible software, together with an end-of-year submission.

HMRC has recently announced that they will begin automatically signing up taxpayers from September 2026 where they believe the taxpayer should already be using MTD but has not yet registered. The sign-up process will be carried out in stages and could affect around 294,000 taxpayers. HMRC says that they will notify the taxpayer once they have been signed up.

If you receive a letter or digital notification from HMRC, do not ignore it. You should review your MTD status immediately, check that HMRC's information is correct, and ensure you have suitable MTD-compatible software in place. If you believe you qualify for an exemption, or HMRC's records are incorrect, action should be taken promptly.

If you are unsure whether MTD applies to you, need help selecting software, or have received an HMRC sign-up notification, please contact us. We can review your position, ensure you meet your obligations and help you establish a compliant and efficient MTD process.
 
HMRC USING THIRD-PARTY INFORMATION TO TARGET LANDLORDS
HMRC has begun writing to landlords where the information it holds from third parties does not appear to match the taxpayer's records. The letters encourage recipients to review whether all rental income has been declared and remind them of their obligations under Making Tax Digital (MTD) for Income Tax.

HMRC receives information from a variety of sources, including tenancy deposit schemes and other statutory reporting systems. This data is increasingly being used to identify landlords whose tax returns may not accurately reflect their property income.

If you receive one of these letters, it is important not to ignore it. HMRC asks landlords to review their position and take action by the deadline stated in the correspondence. Where there is undeclared rental income, HMRC expects the taxpayer to make a disclosure. If there is nothing to declare, HMRC should still be informed using the contact details provided.

The stakes can be significant. HMRC warns that if it later opens a compliance check or criminal investigation, any disclosure made at that stage may be treated as a "prompted" disclosure, potentially leading to higher penalties.

The letters also remind landlords to consider whether they have any capital gains tax obligations following the disposal of a rental property and whether they fall within MTD for Income Tax.

For landlords, the message is clear: ensure rental income is fully declared and maintain accurate records. If you receive such a letter, please notify us as soon as possible, as we can help.
 
ADVISORY FUEL RATES FOR COMPANY CARS
 
The table below sets out the HMRC advisory fuel rates from 1 September 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.

Petrol vehicles: 14p per mile for engines of 1,400cc or less, 17p per mile for engines between 1,401cc and 2,000cc, and 27p per mile for engines over 2,000cc, up from 26p.
Diesel vehicles: 15p per mile for engines of 1,600cc or less, 16p per mile for engines between 1,601cc and 2,000cc, down from 17p, and 22p per mile for engines over 2,000cc, down from 23p.
LPG vehicles: 11p per mile for engines of 1,400cc or less, 13p per mile for engines between 1,401cc and 2,000cc, and 20p per mile for engines over 2,000cc, down from 21p. 
 
You can also continue to use the previous rates for up to one 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 Approved 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).

4th September 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

Bonds, oil and AI
Andy Burnham’s first visit to take Prime Minister’s Questions in Parliament came just as the country’s 10-year borrowing costs rose to levels only seen during the credit crisis.

Even worse, the yield on a 30-year gilt hit 5.89%, the highest level since 1998.

While Mr Burnham sought to reassure political opponents and the City of London that his government would maintain fiscal responsibility, pointing out that Britain was cutting its deficit faster than any other G7 country, the effective cost of borrowing is likely to grow.

For companies and households, it could be bad news. Mr Burnham did not rule out more tax hikes in the upcoming October budget, if only to maintain current government expenditure. That doesn’t include the demands to increase defence spending.

And as far as bond buyers are concerned, debt levels stand at 98.2% of Gross Domestic Product (GDP), their highest since 1960. That makes them nervous.

But what has spooked the market is more systemic. Debt levels in the US are at 120%, and many countries in the EU see debt levels in excess of 100%.

And the UK can no longer rely on the domestic pensions industry and insurers to be the buyers of gilts. In 2000, nearly 70% of gilts purchased were bought by this sector. It has fallen to around 20%.

The global reality is that borrowing costs in US, Japanese and European bond markets have seen multi-decade highs in market interest rates. In other words, investors have a lot of choice when buying government debt and the interest rates they get. They’re also getting pickier in assessing macroeconomic risk.

There’s also more competition for the cash to buy the bonds.

Andrew Bailey, the governor of the Bank of England, has already warned G20 finance ministers that Artificial Intelligence (AI) could cause a global economic downturn.

Apart from the cybersecurity risk to financial systems, he acknowledged that AI and AI-related projects have been sucking money from investors at levels not seen before. Much of this investment has come from credit markets and debt for financing.

These investments have also produced over-priced stock markets at levels not seen since the dot.com crash, increased levels borrowing by both retail and institutional investors along with huge concentration of money into a small number of major technology companies.

All are elements of global economic risk.

What may be of more immediate concern though is the pressure on inflation. Periods of inflation result in interest rate hikes.

The conflict with Iran has so far had little impact on the UK. Expected oil price rises haven’t been fully realised as China has reduced demand, and other producers have increased production.

The closure of the Strait of Hormuz is expected to begin to bite though, and affect UK energy prices.

North Sea Gas prices have more than doubled this year. The UK gets about half of its gas from the North Sea, with the rest from Norway and the USA. Currently, the price of natural gas in Britain is eight times higher than in the USA.

With rising energy costs, inflation will again go up, followed by interest rates.

Of course, times of uncertainty also create opportunities. However, these economic signals suggest businesses should plan for the potential of higher costs and borrowing costs.

If you need any help with forecasting costs or if there are ways to reduce your borrowing costs, please contact us. We’d be happy to help you.
 
Business optimism rises, sort of
The media’s ‘Burnham Bounce’ seemed absent from the latest Institute of Directors (IoD) Economic Confidence Index. Fewer than 24% felt optimistic that Mr Burnham and his new cabinet would improve either their business outlook or that of the UK.

One standout statistic was the proportion of respondents concerned about climate change and extreme weather events. This has more than doubled, rising to 17% from 7%.

While the August survey showed overall optimism rising slightly for the UK’s prospects, the view was more negative for their own business. The Index measures business leader optimism with underlying indicators showing modest improvements across the board during the month.

• Revenue expectations increased.
• Headcount expectations were little changed.
• Investment intentions improved slightly.
• Export expectations remained stable.
• Cost expectations remained elevated.

Despite an improved level of confidence, the impact of the new Prime Minister and Cabinet on business leaders’ optimism was in negative territory, with over 76% believing there would be no change or had a pessimistic view of the change.

When asked about the factors holding back business growth and investment, business leaders overwhelmingly pointed to uncertainty.

Tax uncertainty (58%), general policy uncertainty (55%) and demand uncertainty (40%) were the most frequently cited barriers. Weak expected demand (27%) and labour and skills shortages (23%) also featured.

Among the factors harming businesses (asked quarterly):

• UK economic conditions remain the most significant factor impacting business (selected by 73% of survey respondents, down from 75%).
• Concerns about taxation increased sharply, with employment taxes rising to 62% from 54%, and business taxes rising to 56% from 47%.
• Compliance with government regulations (40%, up from 35%) and the cost of energy (38%, up from 35%) both overtook global economic conditions (36%, down from 43%) as sources of concern.

Several areas of risk saw notable increases in pessimism. Citations of misuse of artificial intelligence rose to 36%, from 29% in May, while concern about a global trade war increased to 31%, from 24%.

Should you have concerns about either business or employment taxes, please get in contact. We're here to help.
 
Companies House brings the changes
Companies House has changed its login process and from December objections to a limited company being struck off must be made through its ‘Make an objection’ online service.

As of last month, all new users must use a GOV.UK One Login to find and update company information services.

For existing users with a registered account, their current login details will continue to work with the option found further down the login page. These account login details will have to be moved to the GOV.UK One Login system in the future and users will be told by Companies House when to do it.

A GOV.UK One Login allows the use of one email address and password to access many government services. To sign in, individuals will need an email address, password, and a second check (Multi‑Factor Authentication) using an authenticator app or SMS.
 
Shared Companies House accounts
If a business currently has a team sharing an account to access Companies House records, it should prepare for change. Each GOV.UK One Login must belong to one person.

To avoid problems, each person who needs access should create their own Companies House account linked to their own GOV.UK One Login. Sharing a single account after linking to GOV.UK One Login can trigger security checks that lock users out.

Objections
From 1 December 2026, objections to a limited company being struck off must be made through the ‘Make an objection’ online service and email objections will no longer be accepted. Companies House says this change will make submitting objections easier, quicker and more secure.
 
Foreign investors clean up on UK companies
The latest Mergers and Acquisitions (M&A) data from the Office for National Statistics (ONS) reveal a depressing landscape for UK companies. Foreign acquisitions of UK companies soared in value to £25.4 billion, up £9.7 billion from Q1 2026 and £15.7 billion higher than Q2 2025, highlighting how cheap UK company valuations are compared to foreign markets.

This compares with only seven companies listing in London so far this year.

The domestic UK M&A landscape is a mixed one. On the one hand, UK-on-UK deals rose in value to £4.2 billion, more than doubling from £1.8 billion in Q1 2026. On the other, the number of domestic transactions dropped to 130, down from 142 in the previous quarter and much lower than the 241 recorded in Q2 2025.

The UK deal value of £4.2 billion compares poorly to foreign investment in the UK (£25.4 billion).

Outward UK investment saw a major decline, falling to £2.7 billion from £4.1 billion in Q1, but was only £1 billion lower than the previous year’s second quarter.

The ONS cautions that these figures are provisional and subject to revision, but the data points to a market shaped by volatility and a few high-value deals. Inward M&A values were buoyed by several large acquisitions, while the number of transactions, both inward and domestic, continued a downward trend. Outward M&A, meanwhile, reflected a more cautious approach by UK firms to overseas expansion.

The Bank of England’s June 2026 summary highlighted subdued investment intentions, citing the ongoing Iran conflict, heightened uncertainty and tighter financing and tax conditions as factors dampening business appetite for new projects.

The ONS’s M&A statistics only include deals worth £1 million or more that result in a change of ultimate control.

With global uncertainties and domestic economic pressures persisting, the outlook for UK M&A remains mixed.

To read the ONS research, see here: https://www.ons.gov.uk/businessindustryandtrade/changestobusiness/mergersandacquisitions/bulletins/mergersandacquisitionsinvolvingukcompanies/apriltojune2026
 
Compulsory smart meter roll-out for small businesses
The UK government has unveiled its comprehensive response to the consultation on the post-2025 rollout of smart meters for non-domestic sites.

The initiative targets approximately three million smaller businesses and public sector locations across Great Britain, aiming to accelerate the adoption of smart meters as a cornerstone of the Clean Power 2030 Mission.

Smart meters are seen as vital for enabling a flexible, efficient power system, offering organisations real-time insights into their energy consumption. This helps businesses manage costs, identify savings and make informed decisions about tariffs and operational efficiency.

A key feature of the new framework is the introduction of smart-contingent contracts for non-domestic consumers.

Smart-contingent contracts are fixed-term non-domestic energy contracts (which are significantly cheaper than alternatives) that require the installation of a smart meter. The consultation response, ‘Non-domestic smart meter rollout post-2025’, had noted a growing trend among energy suppliers to use such contracts to drive smart meter uptake, particularly among smaller organisations that have been slower to engage with the technology.

There were concerns about inconsistent implementation, including complex contract terms or unfair penalties if installations are delayed for reasons beyond the customer’s control.

To address these issues, the government proposes to standardise the rollout of smart-contingent contracts.

From January 2027, suppliers must begin communicating upcoming changes. By September 2027, all new fixed-term contracts for designated premises must include a smart meter installation clause. Suppliers will also be required to adhere to a legally binding consumer protection code, ensuring transparency, fairness, and flexibility - especially for customers facing financial difficulties or those needing additional works before installation.

The government’s policy package has been shaped by stakeholder engagement, with 46 responses received from energy suppliers, consumer groups, metering organisations and intermediaries.

Most stakeholders supported the government’s direction, recognising the need for regulatory intervention to protect consumers and drive consistent implementation. Some concerns were raised about the timelines for compliance and the complexity of managing installations, particularly during peak contract renewal periods. In response, the government has adjusted the implementation schedule to allow suppliers a full year to prepare.

An assessment accompanying the policy estimates significant net benefits, with anticipated smart meter uptake reaching 88% of non-domestic sites by 2030 and annual bill savings of up to £29 million.
  
New £100m AI procurement competition for UK firms
The Chancellor, John Healey, has launched the first set of procurement competitions under the new £100 million Sovereign AI R&D Procurement Scheme.

The government says the scheme has been designed to help innovative British startups compete on a level playing field, drive growth and improve public services. The move backs British Artificial Intelligence (AI) companies to develop solutions to some of the UK’s challenges. Initially, the government has identified four areas as ‘challenges’.

The first four competitions launched are:

• The NHS productivity challenge: Working with the Department of Health and Social Care, firms will develop AI systems that can automate workflows, coordinate care and support decision-making across health services, helping deliver the ambitions of the NHS 10 Year Health Plan while improving productivity and staff experience. 
• Driving compute efficiency: Led by the Department for Business, Innovation, Science and Trade and ARIA’s Scaling Inference Lab, this challenge will support technologies that improve the efficiency of AI computing infrastructure, helping deliver the government’s ambition to significantly expand the UK’s public AI compute capacity while reducing costs for researchers and businesses. 
• Integrate AI at pace across Defence mission environments: Working with the Ministry of Defence, firms will develop solutions that securely connect data and frontier AI capabilities across defence systems, strengthening operational effectiveness and supporting sovereign national security capabilities. 
  
• Agent security and resilience testing: In partnership with the National Cyber Security Centre, this challenge will support technologies that help organisations understand, manage and mitigate the risks associated with increasingly capable AI agents, helping unlock the safe adoption of AI across the economy. 

The focus is on technology that has moved beyond early research but needs the opportunity, funding and environment to prove what it can do.

Successful companies will also keep the intellectual property they create, allowing them to take those innovations beyond the pilot stage and develop commercial products for customers in the UK and around the world. They will work with government departments to develop demonstrator-stage technologies with the potential to scale up.

The Sovereign AI R&D Procurement Scheme is designed to be different from any previous government-backed unit, acting like a venture capital fund. Further competition challenges are expected to follow as the programme expands.
 
Consultations 
Tax treatment of predevelopment costs
The government is consulting on the tax treatment of predevelopment costs. These are costs incurred in the early stages of an investment project before work begins. They can include costs to assess feasibility, obtain regulatory approvals and carry out preparatory activities.

The consultation follows the recent Supreme Court judgment in the case of Orsted West of Duddon Sands (UK) Ltd & others v HMRC [2026} UKSC 12, where the cost of preliminary studies and surveys relating to offshore wind farms did not qualify for Plant and Machinery capital allowances (PMA's), as there was not a close enough connection between the expenditure and the plant provided. 

The government believes that while the decision in the Orsted case was clear, there is still some uncertainty for businesses about how the judgment could impact the availability of capital allowances on wider predevelopment costs.

The consultation closes at midnight on 21 September 2026. Details can be found at https://www.gov.uk/government/consultations/tax-treatment-of-predevelopment-costs--2

Customs Modernisation call for evidence
In June 2026, HMRC launched a 'Call for evidence on Customs Modernisation'. It seeks views on how international trade is evolving and what this means for customs processes in the UK and aims to identify where the current system works well, how it supports modern trade and what further improvements can be made.

The call for evidence closes at midnight on 15 September 2026. Taxpayers with questions should contact the customs modernisation team by email: customsmodernisation@hmrc.gov.uk. The call for evidence documents can be found here: https://www.gov.uk/government/calls-for-evidence/customs-modernisation
 
And in other news…
IP exit tax
The Financial Times has reported that the business secretary, Jonathan Reynolds, is seeking to quell rumours that the government is planning an ‘exit fee’ for businesses that move abroad after spinning out of UK universities.

The unofficial briefings from the Department for Business, Innovation, Science and Trade sought to rebuff a Sunday Times report that the government was planning an exit fee. The paper said that Lord Vallance, a former science minister and current chairman of Andy Burnham’s AI taskforce, was behind the move in an effort to stem the outflow of the UK’s valuable Intellectual Property (IP).

The idea was initially floated in 2024, in a report by academics at the London School of Economics and the Centre for the Analysis of Taxation who argued that an exit tax or levy should be based on the percentage of a company’s valuation if it sells or floats overseas. 

The UK has seen an exodus of high-growth companies moving abroad and more than 2,000 spinouts have emerged from British universities since 2010.

Banks start to act on COVID bounce-back loans
Banks have begun legal action to regain the state-backed loans they administered during COVID. Starling Bank, Barclays and HSBC have filed winding-up petitions against nearly 70 companies that have defaulted on loans, reported the Financial Times.

It says that government pressure has pushed them to go after debtors, especially small businesses that appear to have been dormant for years or those that failed to file accounts.

At least £2.8 billion was lost through the business Bounce Back Loans aimed at supporting floundering businesses through COVID. Although administered by the high-street banks, the taxpayer underwrote the loans.

The UK Carbon Border Adjustment Mechanism (CBAM) 
The UK CBAM will be introduced from 1 January 2027 and places a carbon price on highly traded, carbon-intensive products imported into the UK, ensuring a comparable carbon price to that paid by UK manufacturers.
 
HMRC have published guidance to enable businesses to check whether their goods are in scope, understand their record-keeping obligations and check whether they may need to register. To stay up to date, taxpayers should register with the CBAM mailing list by emailing: cbampolicyteam@hmrc.gov.uk.

Government guidance on the Carbon Border Adjustment Mechanism can be found here: https://www.gov.uk/money/carbon-border-adjustment-mechanism

28th August 2026 – Hillmans Weekly Update

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

Have a great bank holiday weekend. 

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

Energy prices set to rise
Energy regulator Ofgem has announced a 4% increase in the energy price cap for the period covering 1 October to 31 December 2026. This increase reflects higher wholesale gas prices due to the ongoing conflict in the Middle East, with volatile global gas markets remaining the dominant driver of price changes.

This includes the government's removal of VAT from all domestic electricity bills.

While this price cap increase does not directly affect businesses, as the cap applies only to domestic customers, the indirect effect of rising wholesale energy prices is likely to push the costs of commercial contracts upwards.

The energy price cap protects around 22 million households on default tariffs by limiting the maximum rates and standing charges that energy suppliers can charge. It is updated every three months to reflect changes in the underlying costs of supplying energy.
 
Prepare to be signed up for MTD 
Last week, HMRC confirmed that, from September 2026, they will sign up taxpayers who are required to use Making Tax Digital (MTD) for Income Tax for 2026-27, but who have not yet registered for the service themselves. They have now published guidance setting out the steps affected individuals should take.

HMRC will automatically sign up taxpayers if their records show qualifying income exceeded £50,000 in the 2024-25 tax year and they have not yet registered.

For taxpayers whose level of income means that they are not required to join MTD until 2027-28 or 2028-29, there is no change. It is only taxpayers who were required to sign up to MTD for 2026-27 that will be automatically signed up by HMRC.

What happens if HMRC automatically signs you up?
HMRC will contact you directly, either by post or digitally depending on your contact preferences, asking you to complete a ‘checking step’.

You can complete this checking step yourself, or you can ask us as your agent to do it for you. Because HMRC will not write to us to say that they have signed you up, you will need to let us know if you would like us to help you.

If you would like to complete the checking step yourself, it can be carried out in the ‘Making Tax Digital for Income Tax’ section of your HMRC online services account; this will be your Personal Tax Account or Business Tax Account. If you have never used an HMRC online services account, you will need to set up an account.

The ‘checking step’ will involve verifying the information HMRC holds on your business and property income. It is important to remember that HMRC's information derives from historical data for 2024-25. This means it is possible that HMRC could include details for businesses that have ceased.

If your business has ceased, you do not need to use MTD and HMRC will confirm this once they have been contacted.

Once joined, you will need to use compatible software to catch up and create digital records from the start of the tax year. Any overdue quarterly updates will need to be submitted as soon as possible (the first quarterly submission was due on 7 August 2026).

HMRC have confirmed there will be no penalty points for missing a quarterly update for 2026-27. A final quarterly update will be required before the 2026-27 tax return can be submitted, and penalties will be charged if the tax return is submitted late.

If you have been signed up and are not sure why or need any other help with MTD, please contact us. We’d be happy to help you!
 
How the ONS Collects Statistics
Tougher social changes have affected the reliability of some labour productivity statistics gathered by the Office for National Statistics (ONS) and the organisation has come under increased scrutiny.

The ONS collects information from a wide range of sources to produce official measures of the UK economy, labour market and living standards. These include household and business surveys, employer returns and administrative data held by government departments such as HMRC.

With a reputation for being the ‘gold standard’ for national statistics, the criticism of the reliability of labour productivity, which looks at how much is produced for each hour worked across the economy, has stung.

It’s a criticism that Richard Heys, Deputy Chief Economist at the ONS, accepts but explains.
Traditionally, many key economic indicators have relied on surveys.

For example, labour productivity, a measure of how much output is produced for each hour worked, was historically calculated using UK Gross Value Added (GVA) alongside hours worked data from the Labour Force Survey (LFS).

But there have been declining response rates to the LFS in recent years that has made some employment and productivity estimates less reliable, prompting the ONS to review its methods.

To strengthen its statistics, the ONS increasingly combines survey findings with administrative records.

Since 2024, it has published an experimental productivity measure based on HMRC payroll data collected through the Real-Time Information (RTI) system, supplemented with data on self-employment and working hours. The organisation is now developing a new ‘components’ approach that draws together information from several sources, including RTI, the Labour Force Survey and the Workforce Jobs survey completed by employers.

Alongside these methodological changes, the ONS is introducing technology to improve efficiency and data quality. Artificial intelligence is being used to classify occupations and industries from survey responses, reducing manual processing and improving accuracy. The agency also plans to automate the extraction of spending information from household receipts collected through the Living Costs and Food Survey.

These developments come as the ONS works to address long-standing issues with labour market statistics, update measures such as GDP, develop a new business register and prepare for the 2031 Census. While additional funding has been allocated for census preparations, tight budgets mean the organisation is focusing resources on its core economic statistics and seeking more efficient ways to gather and process data.

The ONS's current direction reflects a broader shift away from relying solely on surveys towards combining multiple sources of information. This approach is designed to improve the reliability of official statistics while reducing costs and responding to the challenges of falling survey participation.
 
New trade union rules
From October 2026, companies will have to comply with new rules on trade unions introduced as part of the Employment Rights Act. 
Companies need to be attentive to the rule changes. Employers will have a duty to tell workers of their right to join a trade union and will need to give them a written statement setting out this right. This applies even if the workplace is already unionised.

These changes could also mean a review of current Human Resource materials for employees both new and existing.
Employers also need to be careful that language in documentation or from managers could be seen as discouraging or discriminating against union membership.
 
Zero-hour contracts
The government had previously issued its consultation on the future of zero-hours contracts. Its main proposals include giving employees the right to guaranteed hours, where the number of hours offered reflects the hours worked by a qualifying worker during a reference period.

There needed to be reasonable notice of shifts and changes to these, along with payment for shifts cancelled, curtailed or moved at short notice.

Although these measures have not yet taken effect and the government awaits one last consultation, the proposals indicate policy. 
 
Mandatory payrolling of Benefits in Kind: Actions to take now
The tax rules on Benefits in Kind (BIKs) are changing. From 6 April 2027, Phase 1 of HMRC’s ‘Mandatory payrolling of Benefits in Kind and expenses’ comes into force. Phase 1 will apply only company cars, car fuel, vans, van fuel and medical benefits.

Mandatory payrolling for most other benefits will be introduced from April 2028.

Employers will need to begin preparing for the changes, which will include ensuring that payroll software and processes are correctly set up. However, to avoid employees being surprised, employers should also consider communicating the changes to their staff.

Early communication is key to making sure staff will understand how this change may affect their tax code and take-home pay.

What to explain
It would be good to help staff understand that if they currently pay tax in arrears on BIKs they will not do so from April 2027 onwards for any BIKs that are included in Phase 1.

Many employees may not realise this is how they are paying tax on BIKs, and that next year they will pay tax on their BIKs for cars, vans, fuel (for both cars and vans) and medical benefits in the year they receive them.

They may currently have a deduction in their tax code so they pay tax on an estimated benefit. This will no longer be the case from April 2027.

Tax on Phase 1 BIKs must be paid in real time in the year they are received.

What this means in practice is that some employees could end up paying tax in real time on some benefits they are receiving in 2027-28, while at the same time also be catching up with payments for any BIKs from the previous tax year. It might seem to them that they are paying tax twice. This is not the case but could be confusing if it is not explained.

Employees can be advised to contact HMRC to discuss options based on their circumstances if this overlapping taxation causes them hardship.

Should you have queries or need advice on payroll or BIKs, please get in touch. We’d be glad to help.
 
Mileage allowances changed for tax year 2026-27
HMRC have reminded businesses that the Approved Mileage Allowance Payments (MAPs) have been updated for the 2026-27 tax year. Rates have:

• Increased to 55p per mile for the first 10,000 miles.
• Remained at 25p per mile after 10,000 miles.

These changes are backdated to 6 April 2026.

If you reimburse your employees at or below the approved MAP rate, you may want to increase the amount you reimburse your employees for business mileage, in line with the new approved MAP rates.

Reimbursement?
If you paid your employees mileage payments above the old rates, Income Tax and/or Class 1 National Insurance contributions may have been deducted that may no longer be due.

If so, you can correct the payroll for previous months so that overpaid tax and both employers' and employees’ Class 1 National Insurance contributions can be refunded.

If you need any help in doing this, please feel free to get in touch. We’d be happy to help you!

21st August 2026 – Hillmans Weekly Update

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

Have a great weekend. 

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

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

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

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

Key benefits for businesses taking part include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Several changes are already in force, including:

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

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

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

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

Acas recommends businesses:

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

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

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

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

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

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

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

7th August 2026 – Hillmans Weekly Update

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

Have a great weekend. 

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

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

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

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

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

Our recommended approach:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The full implementation roadmap is expected later in 2026.

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

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

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

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

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

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

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

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

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

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

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

To read the Tax Update, see here.

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

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

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

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

If you have a side hustle, you should:

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

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