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