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).
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